Wednesday, July 29, 2009
OPEC: World Oil Market Will Improve in 2010
Wednesday, 29 July 2009
The oil market this year has been strongly impacted by the financial crisis, global recession and resulting erosion in world oil demand. These factors have substantially magnified the uncertainties affecting the market and contributed significantly to volatility. They have also made projecting oil market developments very challenging, as the current uncertainties are expected to continue to cast a shadow over the market in 2010. But, according to OPEC’s latest Monthly Oil Market Report, covering the month of June, world oil market will improve during 2010 as the world economy will escape from recession and the demand will be stenghtened. World economic growth in 2010 is forecast at 2.3%, representing a recovery from the 1.4% contraction expected in 2009. In the OECD, growth is expected to remain anemic at 0.7%, below the pace seen after previous recessions, reflecting the depth and complexity of the current downturn. With a 1.2% growth forecast, the US will outperform Japan (+0.9%) and the Euro-zone (-0.4%), with the latter seen to remain mired inrecession well into 2010. Risks remain predominantly on the downside, despite the recent improved sentiment in forward-looking financial and commodity markets. In the US, stretched households will require time to readjust their balance sheets, amidst rising unemployment and sharply diminished wealth, implying modest growth in consumer spending. Japan and Germany are seeking to rebalance their economies away from an overdependence on export-led growth. Continued Euro-zone banking sector problems may limit credit next year.
Developing countries will be the major contributors to global growth next year with a forecasted expansion of 3.5% from 1% this year. Growth in India is expected to accelerate to 6.5% from 5.7% while Chinese growth picks up to 7.5% from 7.0% this year. China and India alone will contribute about 50% of total world growth next year. However, problems still abound as emerging economies remain vulnerable to developments in OECD countries.
The oil market this year has been strongly impacted by the financial crisis, global recession and resulting erosion in world oil demand. These factors have substantially magnified the uncertainties affecting the market and contributed significantly to volatility. They have also made projecting oil market developments very challenging, as the current uncertainties are expected to continue to cast a shadow over the market in 2010.
World economic growth in 2010 is forecast at 2.3%, representing a recovery from the 1.4% contraction expected in 2009. In the OECD, growth is expected to remain anemic at 0.7%, below the pace seen after previous recessions, reflecting the depth and complexity of the current downturn. With a 1.2% growth forecast, the US will outperform Japan (+0.9%) and the Euro-zone (-0.4%), with the latter seen to remain mired in recession well into 2010. Risks remain predominantly on the downside, despite the recent improved sentiment in forward-looking financial and commodity markets. In the US, stretched households will require time to readjust their balance sheets, amidst rising unemployment and sharply diminished wealth, implying modest growth in consumer spending. Japan and Germany are seeking to rebalance their economies away from an overdependence on export-led growth. Continued Euro-zone banking sector problems may limit credit next year.
Developing countries will be the major contributors to global growth next year with a forecasted expansion of 3.5% from 1% this year. Growth in India is expected to accelerate to 6.5% from 5.7% while Chinese growth picks up to 7.5% from 7.0% this year. China and India alone will contribute about 50% of total world growth next year. However, problems still abound as emerging economies remain vulnerable to developments in OECD countries.
Makis Theodoratos, Hellenic Shipping News Worldwide
