They should have released all this oil when the economy was strong to create better demand and when the Fed had battled inflation and prices were holding higher. Having said that, the market isn’t too worried about the 135, 000 b/d increase in April in the immediate sense – it’s more about the intention to continue to release oil over the next two years.
Why aren’t financial investors buying oil at these lower prices?
One of the key things they’re looking for has been Chinese stimulus demand. That hasn't happened for eight or nine months, so they're still waiting. If we start seeing the lower dollar which we have right now, the big question is whether China will start printing yuan to help boost their economy, and whether that would then change oil demand. China's not the oil economy it was 10 years ago, so even if they do introduce liquidity, it's not going to boost manufacturing investments, but rather consumer confidence. In addition, if you look at the entire spectrum of financial assets to invest in, there's so much more value in other commodities, so why would you want to buy oil unless you see a massive pickup in demand that sees a market in deficit?
Any risk of US recession from Trump tariff policy?
The sell-off in equities has been mainly in the tech sector. There's a massive amount of money concentrated in just seven or eight stocks, so this is just a massive portfolio rotation, taking money out of technology and into markets like China and Europe. If this were truly a recession, everything would be sold off.
What is Trump’s monetary policy end game?
He wants to lower bond yields because everything is realized on the back end of the bond market - consumer behavior, mortgages, housing, SMEs. He's focused on getting that yield down to about 4.2% and pushing fiscal expenditure, and so needs to get the deficit under control.