Released August 13, 2024 | SUGAR LAND
en
Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Amid recent concerns about a potential recession in the U.S. economy, the world's largest, economists at the Organization of the Petroleum Exporting Countries (OPEC) revised their forecast for global oil demand growth lower.
OPEC economists in their monthly market report for August left their forecast for global economic growth unchanged at 2.9% for both 2024 and 2025. The U.S. economy is expected to expand by 2.9% this year, but that should be offset by weakness in Asia.
The U.S. jobless rate in July hit 4.3%, up from 4.1%, to bring the three-month average to more than a half point above year-ago levels.
That triggered the so-called Sahm Rule, named after economist Claudia Sahm who predicted every recession since the 1970s. The rule states that if the three-month average jobless rate is a half-point above the lowest point over the previous 12 months, that economy has entered a recession.
Disposable income is another concern in the U.S. economy, with year-on-year inflation still above the target rate of 2% set by the Federal Reserve. Manufacturing too is on the decline.
"Despite these challenges, the current positive growth dynamics, as seen in 2Q24, offer some potential upside to the annual growth forecast," OPEC economists wrote.
For Japan, the economy remains subdued after losing its place as the third-largest economy in the world last year. Japan's economy contracted in both the third and fourth quarters of last year, sinking into a technical recession. OPEC expects that economy to grow by only 0.9% this year.
In China, forecasters are pointing to a year-on-year increase in economic growth of 4.7% during the second quarter, down from the rate of 5.3% during the first quarter. Apart from problems in the real estate sector, there's been a general slump in demand in the Chinese economy, particularly in the services sector.
Globally, OPEC economists revised their estimate for global oil demand growth lower by 135,000 barrels per day (BBL/d) to stand at 2.1 million BBL/d, though that remains above the historical average of 1.4 million BBL/d seen before the COVID-19 pandemic.
"This slight revision reflects actual data received for 1Q24 and in some cases 2Q24, as well as softening expectations for China's oil demand growth in 2024," economists wrote.
On price dynamics, OPEC economists said markets went on a wild ride last month. Supported by storms in the Atlantic, and by strong travel demand in the U.S. economy, oil prices are showing some bearish trends.
"Geopolitical developments in the Middle East further buoyed oil prices," OPEC economists added.
Vessels moving through the waters of the Middle East, from the Persian Gulf to the Red Sea, continue to face threats from the Iranian-backed Houthi rebel group in Yemen. Attacks began in October after militants from Hamas stormed the border of Israel, triggering something of a proxy war between Israel's supporters and Iran's.
On Sunday, the U.S. military deployed the USS Abraham Lincoln, which is equipped with F-35C stealth jet fighters, and the USS Georgia guided-missile submarine to support operations in the Middle East. On Monday, meanwhile, the official Islamic Republic News Agency in Iran reported that Hezbollah fired some 30 rockets from southern Lebanon into Israeli territory.
The price for Brent crude oil, the global benchmark, was up by around 1.2% in pre-market trading Monday to move in the $80 per barrel range.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
OPEC economists in their monthly market report for August left their forecast for global economic growth unchanged at 2.9% for both 2024 and 2025. The U.S. economy is expected to expand by 2.9% this year, but that should be offset by weakness in Asia.
The U.S. jobless rate in July hit 4.3%, up from 4.1%, to bring the three-month average to more than a half point above year-ago levels.
That triggered the so-called Sahm Rule, named after economist Claudia Sahm who predicted every recession since the 1970s. The rule states that if the three-month average jobless rate is a half-point above the lowest point over the previous 12 months, that economy has entered a recession.
Disposable income is another concern in the U.S. economy, with year-on-year inflation still above the target rate of 2% set by the Federal Reserve. Manufacturing too is on the decline.
"Despite these challenges, the current positive growth dynamics, as seen in 2Q24, offer some potential upside to the annual growth forecast," OPEC economists wrote.
For Japan, the economy remains subdued after losing its place as the third-largest economy in the world last year. Japan's economy contracted in both the third and fourth quarters of last year, sinking into a technical recession. OPEC expects that economy to grow by only 0.9% this year.
In China, forecasters are pointing to a year-on-year increase in economic growth of 4.7% during the second quarter, down from the rate of 5.3% during the first quarter. Apart from problems in the real estate sector, there's been a general slump in demand in the Chinese economy, particularly in the services sector.
Globally, OPEC economists revised their estimate for global oil demand growth lower by 135,000 barrels per day (BBL/d) to stand at 2.1 million BBL/d, though that remains above the historical average of 1.4 million BBL/d seen before the COVID-19 pandemic.
"This slight revision reflects actual data received for 1Q24 and in some cases 2Q24, as well as softening expectations for China's oil demand growth in 2024," economists wrote.
On price dynamics, OPEC economists said markets went on a wild ride last month. Supported by storms in the Atlantic, and by strong travel demand in the U.S. economy, oil prices are showing some bearish trends.
"Geopolitical developments in the Middle East further buoyed oil prices," OPEC economists added.
Vessels moving through the waters of the Middle East, from the Persian Gulf to the Red Sea, continue to face threats from the Iranian-backed Houthi rebel group in Yemen. Attacks began in October after militants from Hamas stormed the border of Israel, triggering something of a proxy war between Israel's supporters and Iran's.
On Sunday, the U.S. military deployed the USS Abraham Lincoln, which is equipped with F-35C stealth jet fighters, and the USS Georgia guided-missile submarine to support operations in the Middle East. On Monday, meanwhile, the official Islamic Republic News Agency in Iran reported that Hezbollah fired some 30 rockets from southern Lebanon into Israeli territory.
The price for Brent crude oil, the global benchmark, was up by around 1.2% in pre-market trading Monday to move in the $80 per barrel range.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
