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Is Oil the Canary in the coal mine?

As the European stock markets reopen in the red this morning, there has still been no rebound in the oil price. Perhaps it might be wrong to rule that out, but looking a little deeper, there are a couple of things to note here. First, the US is now the largest oil producer in the world and there is far less reliance on OPEC and OPEC+ for world demand, given that so much of that is US based. Secondly and perhaps more importantly; the demand outlook is not as strong as vested interests would have us believe. Also, looking deeper into the most recent data, there are growing doubts concerning the US economic outlook. There is also little doubt that massive refinancing ahead of the Fed hike run has played a major role in allowing the US economy to avoid a recession, but that may not have removed the risk, merely delay it significantly. That makes the US jobs numbers this week very important, because if that data (and the non-manufacturing ISM tomorrow) shows further cracks, then the markets will not ignore that. So, as oil prices continue to fall this morning, perhaps we need to look beyond any OPEC manipulation and possibly view this market as the Canary in the coal mine for the world markets into the second half of the year. Brent for August delivery is right now on session lows, just underneath $77.50 

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