While there was some market panic over statements made by Boston Federal Reserve Bank President Eric Rosengren, a “dove” who is now calling for rate hikes, the real reason that there is turbulence on the stock markets of Europe, Wall Street and Asia is the projections by the US Department of Energy that there will remain an oil glut throughout 2017.
The study by the DOE was released on Monday, after markets had already calmed down from the Rosengren remarks end of last week. The DOE report specifically cited the economic stagnation in Europe and North America as the reason why energy consumption is down and will remain so until there is a reversal of the slow-growth/no-growth pattern in the trans-Atlantic region. It is the decline in exports to those critical markets that has caused a slowdown in the growth of energy consumption in China and India. After the DOE report was released, stocks in the big oil multinationals fell.