Pervasive Uncertainty

Global oil markets are pulling back as pervasive uncertainty racks the global markets. It is not me saying that but none other than European Central Bank (ECB) President Mario Draghi, who caught the market by surprise with his negative tone, even though the ECB added stimulus by keeping interest rates at subzero levels at least through December instead raising rates in the summer.

Global stock markets plunged on the fact that maybe Super Mario had lost his magic touch by using the force of his will to move markets by whatever it takes. He freaked out markets when he said the European economy was in “a period of continued weakness and pervasive uncertainty.”

Yet oil seemed to be resilient, trying to defy market pessimism because of the strong global demand numbers that keep coming in, and the strong seasonal pattern that we normally see in March. Yet with more data coming in, oil and gas prices fell after weak economic data in China. Not a weakness in Chinese oil demand mind you, where imports of crude continue to stay near record levels above 10 million barrels per day (bpd).  But data that showed China’s February exports plunged by 21 percent from a year earlier, three times the amount expected. That kind of drop would make one think that China was would be desperate to a trade deal, but they may not get one just yet.

The Wall Street Journal reports that a U.S.-China trade deal isn’t imminent.  The U.S. and China have yet to set a date for a summit to resolve their trade dispute, the U.S. ambassador to China said Friday, as neither side feels an agreement is imminent. “A date hasn’t been finalized” for a meeting between President Trump and Chinese leader Xi Jinping, Terry Branstad, the U.S. envoy to Beijing, said in an interview with The Wall Street Journal. He said preparations for such a meeting aren’t yet underway either. Mr. Branstad said, “negotiators need to further narrow the gap in their positions, including on enforcement of an eventual deal, before summit arrangements are made.”

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