Is This The Next Major Threat For Oil Demand?

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  • Manufacturing growth in the United States slowed in September to its lowest rate since the pandemic recovery started
  • Global maritime trade growth is slowing in a sign that the global economic slowdown is underway.
  • Major trading houses are not concerned about a serious pullback in crude demand.

“Wealth gained by dishonesty will be diminished,
But he who gathers by labor will increase.” Proverbs 13:11

Manufacturing growth in the United States slowed in September to its lowest rate since the pandemic recovery started, in another sign that the U.S. economy is cooling amid aggressive interest rate hikes from the Fed.

If the trend continues in the coming months, it would mean a recession is coming to the United States, analysts say.

Still, most believe it could be a mild recession, or at least a very short one, which may not have a significant impact on oil demand.

Major forecasters, such as the International Energy Agency (IEA) and the U.S. EIA, continue to expect oil demand to grow year over year both in 2022 and 2023.

However, the oil market is focused on fears of a recession instead of on fundamentals, as Saudi Aramco’s chief executive Amin Nasser said earlier this week. The market is currently ignoring the very low global spare capacity and the fact that producers will struggle with oil supply once economies recover, Nasser says.

Economies will rebound sooner or later from the current slowing growth. Some major European economies, including Germany, are teetering on the brink of recession.

The question is whether economies, including in the United States, will see a “harder landing” than the Fed is aiming for.

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