The last 72 hours have not been good for the prospects of the global economy and therefore for the price of oil.
On Thursday, the European Central Bank (ECB) surprised most observers by reversing the course of monetary policy. They announced that they were suspending the rise in interest rates, at least until the end of the year, hinted that they could even return to cuts and reductions. at potentially negative rates, and reintroduced a program of discounted loans to banks to promote growth. In some cases, a flexible monetary policy like this could be welcomed by the market as a necessary and welcome boost. The problem here, however, is not the actions undertaken, but their reason.
Mario Draghi, President of the ECB, spoke of risks for growth that were "… still pointing downwards …" and reduced the bank's estimate for the euro zone's growth of 1 , 7% in December to a very low of 1.1%. He also mentioned the negative rates, which suggests to many analysts that even this could be optimistic.
Now, after news from China and the United States on Friday, Draghi's pessimism seems justified and is more than a serious warning.
China released its trade balance data last night, which showed a drop in exports of more than twenty percent compared to last year. Imports have also declined significantly, indicating that while the ongoing trade dispute with the United States is definitely a problem, the country is a more deeply rooted growth problem for …