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Green shoots badly in need of water

Published Wednesday, October 8th, 2014

Human beings need oxygen and countries need growth. The supply of oxygen is under threat from pollution and growth is in short supply. As forewarned the IMF has cut its global growth forecast for this year for the third consecutive time, taking it down to 3.3% and to 3.8% for next year. According to Reuters this is the ninth out of twelve times in the last three years that current year forecasts have been cut. It has also lowered its expectations for longer term ‘potential’ growth.

Lacklustre growth means stagnant living standards, reduced tax take, constrained welfare budgets, higher unemployment and widening wealth inequality which leads to social distress which in turn feeds into extremism. Low growth is very bad news all round. It is particularly bad news for oil demand, for corporate performance and therefore for stock markets.

It would seem that the US stock markets may have woken up and smelt the coffee yesterday. Perhaps they twigged that the eurozone is in a dreadful shape, alerted by the IMF’s gloom and poor figures on industrial performance from Germany or maybe they have a bad feeling about 3Q results. They are also facing the fact that this is the last month of Federal Reserve QE.

to read the rest of the report, please click here 

Posted by David Hufton