Crude oil is trying to hold ground after Friday’s fear-based market sell-off. Tariff fears and then talks of global growth fears after a sub-par jobs report, not to mention a rising rig count, sent oil lower. Yet, we also have current strong demand, falling OPEC productions and a possibility of a major reaction by the United States after Syria allegedly crossed the chemical weapons line in the sand.
The crude oil sell-off was just downright crazy. Oil got caught up in trade war fears, tech wreck fears, OPEC/Non-OPEC compliance fears, and a build in Cushing, Okla., oil stocks, as reported by Genscape. Stocks had the worst start to April since 1929, but really the magnitude of this sell off was a big April’s Fools Day joke that just one day late.
U.S. stocks tumbled Monday as President Donald Trump continued his criticism of Amazon, sending those in the technology and consumer discretionary sectors lower. The selling also comes ahead of the Trump administration's plan to unveil this week the list of Chinese imports targeted for US tariffs. The list of $50 billion to $60 billion worth of annual imports is expected to target "largely high-technology" products.
So far, China’s response has only been on the aluminum and steel tariffs, announced by the White House last month, and not on the proposed $60 billion in annual tariffs against Chinese products. This shows Beijing is unwilling to enter a trade war with the United States, knowing that it has more to lose than to win. However, trade dispute will continue to dominate investors’ decisions heading into Q2.
For a person who’s been obsessed with stock market gains since his election victory 16 months ago, U.S. President Donald Trump doesn’t appear too concerned about the impact his tariffs are having at the moment.
Crude oil sold off on tariff fears but rallied back as Saudi Arabia is signaling that they are just crazy about production cuts and want an extension. It's tariff fears versus rising demand and falling supply for oil and it seems that supply and demand have the edge right now.
Well, if you thought that OPEC production cuts were difficult to put in place, it may be even harder to work out of them. The extremely successful OPEC cuts, along with their co-conspirator Russia, will at some point be scaled back but raising oil production may not be as easy as it seems.
President Trump agreeing to meet the North Korean leader Kim Jong-Un pleasantly surprised the markets on Thursday. Just a couple of months ago, the two leaders were in in a rather childish spat over whose nuclear button was bigger and hurled insults at each other, at every opportunity. Now, they are about to make history, not only with a possible reconciliation but also because this would be the first-ever meeting between a U.S. president and a North Korean leader. Investors are hopeful that there will finally be a diplomatic breakthrough.