At the March Short-Term Energy Report, the DOE/EIA raised its oil price forecast for 2012 to US$106/bbl, up +$5/bbl from the previous forecast amid concerns over geopolitical tensions in the Middle East, growth in world demand and supply constraints in non-OPEC countries. Yet, the agency revised lower its oil demand projection for this year. Global oil demand is expected to reach 88.96M bbl, down from last month's estimate of 89.25M bbl million last month but up +1.20% from the upwardly revised 87.9M bbl in 2011. Meanwhile, the OPEC also revised down slightly global oil consumption for 2012 to 88.6M bbl from 88.2M bbl projected last month while the IEA stated that global demand is expected to stay unchanged at 89.9M bbl this year.
As far as other oil news is concerned, the IEA stated in a report that, as the EU oil embargo begins in July, shipment from Iran would drop by -50%. Yet, Saudi Arabia attempted to calm market worries by pledging to take up the lost oil in Iran so that oil supply to European countries would not be affected. Meanwhile, the US President Obama and the UK Prime Minister Cameron jointly said that the window for a diplomatic solution with Iran was shrinking. Tensions over Iran are expected to continue to exert influence on oil's direction in the near-term.
As expected, the SNB left its monetary policy unchanged in March. The central bank maintained the 3-month Libor target range at 0-0.25% and pledged to maintain the minimum exchange rate of CHF 1.20 per euro with utmost determination. While acknowledging the mixed macroeconomic outlook, policymakers warned once again of the strength in the Swiss franc. Policymakers stated that growth in Switzerland has slowed significantly over the course of the past year. For 2012, the SNB is now forecasting moderate growth, at close to 1%. Inflation forecasts were revised lower to -0.6% in 2012, from -0.3% projected in December. For 2013 and 2014, general price levels are expected to improve to +0.35 and +0.65 respectively. Despite the absence of any announcement on further intervention, the SNB continued to warn of the challenges imposed by appreciation in Swiss franc. It also stated that the positive impact of the pledge to keep the minimum exchange rate was the reduced exchange rate volatility.
For the dataflow, the US initial jobless claims probably declined to 355K in the week ended March 10 from 362K a month ago. The Philly Fed survey index might have climbed to 11 in March from 10.2 while the Empire State Manufacturing Index probably slid to 17.4 in March from 19.5 in the prior month.