US Recession Concerns Overblown, Says Energy Aspects
Recent worries about a potential U.S. recession may have been exaggerated, according to Amrita Sen, the co-founder of consultancy Energy Aspects. Despite concerns over global economic growth, she asserts that there is no clear evidence pointing to an immediate recession in the U.S. economy. "Overall, we do not believe the global economy is on the verge of a sudden downshift," Sen remarked, emphasizing the hesitation among policymakers due to lackluster Chinese economic data and signs of a U.S. slowdown.
The market turbulence earlier this week, notably a sharp sell-off caused by unwinding yen-funded trades, represents a macro meltdown but is not seen as a one-time event. Sen predicts the possibility of further market fluctuations, yet reassures that the fundamental aspects of the oil market remain robust.
Global Market Gains and Oil Demand Forecasts
Despite the sell-off, global shares rebounded on Friday, recovering nearly all losses and trending towards a weekly gain of over 3%. This recovery comes after prices dropped more than 18% from April highs at the beginning of the week.
Energy Aspects projects a growth in oil demand by 1 million barrels per day (bpd) in 2024 compared to the previous year. This growth rate aligns with historical patterns observed during past global slowdowns. However, in the short term, demand is expected to remain subdued, primarily due to the sluggish Chinese economy.
Looking ahead to 2025, non-OPEC countries are anticipated to increase crude supply by 1.4 million bpd, while demand is projected to grow by 1.2 million bpd. Should non-OPEC supply fall short, existing stockpiles are deemed adequate to meet demand, mitigating potential shortages.
OPEC's Role and Market Balance
Sen also highlights the strategic choices available to the Organization of the Petroleum Exporting Countries (OPEC). "OPEC may choose to delay bringing back the barrels they have outlined," she noted, reinforcing the notion of a balanced oil market with sufficient spare capacity to adjust to demand shifts.
In conclusion, while macroeconomic concerns persist, Energy Aspects maintains a positive outlook on the oil market's stability. This perspective provides a reassuring factor for investors and policymakers alike, emphasizing a balanced market environment with considerable flexibility to address future challenges.
