Global economy: Slipping on oil again? – Danske Bank

By FXStreet FXStreet (Delhi) – Chief Analyst, Allan von Mehren at Danske Bank, suggests that the main event over the past week has been another slide in oil prices, taking them to levels not seen since the financial crisis in 2008.

Key Quotes

“Once again, oil prices surprised by falling even further below what is deemed sustainable longer term where an equilibrium price is seen as closer to USD60. However, the problem with oversupply short term due to weak demand from China and so far a limited supply response is keeping downward pressure on prices.”

“The main driver for this week’s push lower was the lack of supply response from OPEC at its meeting. There is clearly a risk we could see a further slide short term. However, we continue to expect a gradual return to equilibrium prices over the coming year as production moves down in non-OPEC countries in response to a sharp decline in investment activity.”

“A further decline in oil prices is currently the main risk to our forecasts for growth as well as inflation. While lower oil prices are normally a positive thing for global growth, this is no longer the case, in our view. Rather, lower oil prices increase tail …read more

Source:: FX Street