According to Reuters, “OPEC is likely to cut oil supply to support prices at its meeting on Sunday, a member of Kuwait’s Supreme Petroleum Council said.” A month ago, that might have been an indication that prices would rise. And, over the last week, they already have.
But, the rally will probably be short-lived.
The latest comments from the World Bank and IMF make a convincing case that the economic slowdown is spreading from the developed countries to large fast-growing nations including China and India. Expansion will probably also stop in many Third World nations.
If analysts needed any confirmation that oil demand is likely to continue to falter, the import and export numbers for China, which indicated a sharp drop in economic activity in that country should bolster the argument that the downturn will be sharp and long. The need for crude is cratering.
Douglas A. McIntyre
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