The emphasis on slowing global growth as an explanation for weakening oil prices seems misplaced

John Robertson


The emphasis on slowing global growth as an explanation for weakening oil prices seems misplaced. On Friday, the IEA cut its 2015 demand estimate by 0.23 million barrels per day - barely 0.2% of its expected 2015 usage rate. The chart, which includes updated forecasts from the IEA and OPEC for 2015, offers a better perspective of what is happening. The weakest growth in oil used has been in the most strongly growing region in the world, namely the USA. By too readily concluding that oil's problem relates to weakening global demand, investors will be drawing an incorrect inference about the general state of raw material markets. These latest cyclical gyrations in oil (and iron ore) prices are about producers jostling for position more than a further loss in the pace of global growth. Our weekly PortfolioDirect notes have more: (VIEW LINK)

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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


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