Crude oil prices remained under pressure in the European session as investors awaited the Greek election on June 17 and the G-20 meeting on June 18/19. The market hoped the outcome of the election would clear the uncertainty in the Eurozone debt problems while G-20 leaders would help resolve the crisis. However, cautiousness remained ahead of these key events. The International Energy Agency (IEA) revised down global oil demand as global economic slowdown has reduced tightness in the oil market.
At the latest report on oil market outlook, the IEA revised its global crude demand to 89.9M bpd in 2012, up +0.82 mmb from last year but down from -0.1 mmb from May's projection. The agency stated that "market fundamentals have eased since early 2012...the springtime slump in oil markets accelerated in May in the wake of the deepening Eurozone crisis, mounting concern over a slowdown in Chinese growth and rising global oil supplies". On the supply side, the IEA forecasts production to increase by +0.2 mmb to 91.1M bpd in May due to output increases in the US and Canada.
As expected, the SNB announced to leave the target range for the three-month Libor unchanged at 0.00-0.25%. The central bank also reiterated to "maintain the minimum exchange rate of CHF 1.20 per euro and will enforce it with the utmost determination". Policymakers viewed that Switzerland's economy remain "exceptionally high", in particular due to the increase in uncertainty in the Eurozone. The central bank also warned that current level of Swiss franc remained too high and pledged to take any measures to defend the EUR/CHF floor.
On the dataflow, Eurozone's headline inflation eased to -0.1% m/m in May, following a +0.5% gain a month ago. On annual basis, the reading rose +2.4%, easing from +2.6% in April as driven by drops in demand and oil prices. Core CPI, however, stayed unchanged at +1.8%. The US inflation would probably ease further in May. Headline CPI might have dropped -0.2% m/m in May, following a flat reading a month ago. From a year ago, inflation moderated to +1.9% in May from +2.3% in April. The core reading might have slowed to +2.2% in May from +2.3% in the prior month. Initial jobless claims probably dropped -2K to 375K in the week ended June 9.
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