WSJ: Drop In Demand For Oil Hints at Global Slowdown

Wondering where global growth is headed this year? It might help to keep an eye on today’s oil prices.

A sharp drop in global oil demand that began in May was a “leading indicator” of slowing global growth, as the latest round of gross domestic product data from Europe and Japan have confirmed, says London consulting firm Energy Aspects.

The price of Brent crude, the global benchmark, is down 12% from its mid-June peak, the result of tepid demand from European and Asian refineries as well as a perception of reduced geopolitical risk. While prices trawl 14-month lows near $101 a barrel, they are still too high to lure more demand from drivers and other consumers, Energy Aspects says.

“Overall weakness in global oil prices signal that demand has not really picked up” yet, the firm says. “This raises the question of whether the global economy and stock markets are due for a lurch downwards” later this year.
MORE