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Page added on October 11, 2016
Mammoth Global Debt A Risk To Oil Demand
The world’s combined huge debt level poses a risk to oil demand growth, the International Energy Agency (IEA) said on Tuesday, building upon International Monetary Fund (IMF) figures from last week.
The IMF said on October 5 that the global gross debt reached US$152 trillion in 2015, an all time-high, and warned that it could thwart the fragile economic recovery. In the current global environment of low growth and low interest rates, excessive debt sets a vicious loop in which “lower growth hampers deleveraging and the debt overhang exacerbates the slowdown”, the IMF said.
In its monthly report released today, the IEA said, as quoted by Reuters:
“If one believes futures prices, oil could continue to act as an inflationary pressure. Assuming the majority of other global price pressures remain deflationary, the current low inflation/low interest rate environment will most likely remain.”
Regarding oil demand growth, the IEA said that this year should see a 1.2-million barrel increase, and see the same rate of increase in 2017 as well. For the third quarter of this year, the IEA said that demand growth “slowed from a five-year high in the third quarter of 2015 to a four-year low in the third quarter of this year.”
The IEA has pinned its demand projections on the IMF global growth forecasts and warning that record global debt could undermine oil demand growth. “Hence, achieving the IMF’s central 3.4 percent 2017 global economic growth forecast — that underpins the demand forecasts carried in this report — will not be clear sailing.”
Although signs emerge that the global oversupply begins to draw down, the market is likely to continue to be oversupplied through the first half of 2017, the IEA said. Should OPEC reach a deal to limit production and stick to its new quotas and targets, the market could rebalance faster, the agency noted.
By Tsvetana Paraskova for Oilprice.com
8 Comments on "Mammoth Global Debt A Risk To Oil Demand"
Davy on Tue, 11th Oct 2016 10:12 pm
Yeap, demand destruction meets supply destruction. This is something I have been preaching now for 3 years. I like how they mentioned a vicious loop. I like to call it a vicious circle. Sometimes I would call it a vortex of doom. The glut was what threw people for a loop. The glut was the blow off from the burst oil bubble that masked real economic decline. Bad debt is bad debt.
GregT on Tue, 11th Oct 2016 10:22 pm
“Should OPEC reach a deal to limit production and stick to its new quotas and targets, the market could rebalance faster, the agency noted.”
Finally, some good news. I’m sure that most people are looking forward to $3.50/gallon gasoline again.
GregT on Tue, 11th Oct 2016 10:43 pm
I’m patiently awaiting Boat’s expert opinion yet again, on why debt is not something that we need to be concerned about……..
I’ll gladly pay you Tuesday, for a hamburger today. Right Kevin?
Apneaman on Tue, 11th Oct 2016 11:27 pm
Greg, no worries all around
Texans Are Cutting Back, Wheels Come off Houston Economy
http://wolfstreet.com/2016/10/08/texas-sales-tax-collections-fall-consumers-cut-back-houston-economy-drops/
rockman on Wed, 12th Oct 2016 9:04 am
“…an all time-high, and warned that it could thwart the fragile economic recovery.” A “fragile economic recovery” aided by debt accumulation. So the implication seems to be the recovery would strenghten if borrowing is reduced. I wonder sometimes if an editor ever reviews such reports.
Seems like a often repeated dynamic: a consumer borrowing money to make the minimum payment on credit card from another card. Keeps working until he can’t make the min on that second card.
penury on Wed, 12th Oct 2016 11:08 am
rockman, you are correct, An economy dependent upon the continued growth in borrowing has the life expectancy only supported by continuing injections of CB fiat.
sparky on Wed, 12th Oct 2016 2:02 pm
.
” a consumer borrowing money to make the minimum payment on credit card from another card ”
One could wonder if the weak recovery is not simply debt fueled ,
As an analogy …..a drowning man constantly blowing in his leaking flotation vest
Theedrich on Thu, 13th Oct 2016 5:22 am
Hmmm. Maybe sooner rather than later: “The IMF said on October 5 that the global gross debt reached US$152 trillion in 2015, an all time-high, and warned that it could thwart the fragile economic recovery.”
We are entering fantasia. All politicians, all nations everywhere are submerging their futures in unpayable debt, nervously hoping that the piper will not come for them while they are still in office. It seems only the industrialized nations have ministries of propaganda (aka MSMs) effective enough to keep the plebs mushroomed, at least till the next election. The 1% U.S. GDP growth is about to go negative, probably in the first few months of the banshee’s coming reign. What will she do then? Encourage the Negroes to kill more cops? How now, brown cow?