The oil less recovery and China inflation fears

Two items that need special mention today:

There has been a fair bit of coverage on the oil less recovery in OECD, especially North America and Western Europe. That talk has been counterbalanced by the belief that the slack in demand in North America would be balanced by the growth in demand in APAC and the rest of the developing world. But today an IEA (International Energy Agency) representative said that demand in the developing world is not rising as quickly as the recovery would suggest. Just like North America, given the choice of Natural Gas and CNG, consumers are switching to cheaper alternatives and opting for smaller, more fuel efficient cars. This is the first public acknowledgement of the fact that all may not be well with Oil by the time we hit summer of 2010. The timing of the statement is also interesting on the weekend before the scheduled OPEC meeting on the 17th of March.

The second item is the China consumer inflation number and the suggestion that we are likely to see a Chinese rate hike within the next two months. Coming back to back with the Gold is nice, but not nice enough Chinese statement a few days ago, this should make for interesting action.