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Oil prices are reeling

The recent plunge in prices suggests that oil is acting like a leading indicator of global economic growth, reflecting investors’ concerns that lasting trade disputes will dent future growth and risk pushing the world economy into recession. Business sentiment has been deteriorating for some time. By May, the world Purchasing Manager Index for Manufacturing (PMI) […]

Oil prices decline despite the end of Iran waivers

The increase in prices that followed President Trump’s 22 April decision to end waivers on Iranian oil imports did not last, with Brent prices falling from almost USD75 on 24 April to below USD70. Nonetheless, we continue to see heightened risk of oil price spikes above USD80 for Brent in the short-term. Trump’s recent threat […]

Signs of global rebound are appearing

At its Spring Meeting, the International Monetary Fund (IMF) revised downward its 2019 global growth forecast from 3.5% to 3.3% (the same as our own forecast). The IMF left its estimate for 2020 growth unchanged at 3.6% As global growth probably slowed to 3.2% in the second half of 2018, a 3.3% growth estimate for […]

Oil prices supported by OPEC+ cuts…before market risks being flooded again

After last year’s collapse, oil prices have found support since the beginning of this year for several reasons. At this stage, the main question is whether the recent surge in prices is sustainable or whether we will see renewed oil price volatility, with the possibility of a repeat of 2018. The recent release of the […]

Global indicators: manufacturing sentiment declines

After recent downward revisions to our US and euro area GDP forecasts and against a backdrop of declining global manufacturing sentiment, we have revised our world real GDP growth forecast for 2019 to 3.3% from 3.5% previously. Manufacturing sentiment in all regions deteriorated in February, with the exception of emerging economies, where sentiment recorded a small rebound. Deterioration in […]

Oil market update

Increased pressure from President Trump on the Saudis to halt oil production cuts last week had only a temporary impact. Brent prices are currently being underpinned by several factors, including hopes of a US-China trade deal and OPEC+ production cuts, in particular. The Saudis have been aggressively cutting their production recently. With output of 10.1m barrels/day (mbd) in February, they are already […]


January’s deterioration in sentiment was widespread, with the notable exception of the US. However, it is possible that January pessimism was largely caused by December’s poor financial markets. If this is indeed the case, it is likely that we will see a bounce in sentiment in the months ahead, following January’s rebound in markets. The latest global activity hard […]

OPEC+ discipline will be key for oil prices in 2019

Global oil supply is undergoing a structural shift. The US oil industry is growing in importance relative to the OPEC. As a result increased production from non-OPEC producers more than compensated for the output collapse among important OPEC producers such as Iran and Venezuela in 2018. Slowing global growth, and new US pipelines facilities in […]

Oil prices close to fair value

In light of the OPEC + Russia decision to increase output, oil prices declined from end-June to mid-August. This decline is not limited to oil: all commodities have been affected. Industrial metals declined by 12% and non-energy commodities by 5%, as fears rose that international trade disputes will dent global demand for commodities. But we […]

Close to neutral

After seven quarter-point rate hikes in the US since the end of 2015, we reckon we are close to a neutral rate of interest – the rate of interest consistent with trend growth, stable prices and full employment. We calculate that the current neutral rate is 2.1%, compared with a Fed funds rate of 2.0%. […]

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