Oil plunges to $57
Oil plunges to $57
In its monthly oil report, the agency said global oil demand in 2015 will grow by 900,000 barrels a day — 230,000 less than previously forecast — to 93.3 million.
“While demand growth is still expected to gain momentum in 2015 from 2014, the acceleration is now looking more modest than previously foreseen, in line with the ever-more tentative pace of the global economic recovery,” the IEA said.
The benchmark US oil price tumbled more than 3 percent, at one point dropping to $57.34, the lowest intraday price since May 13, 2009, when the global economy was still in recession. Around midday in New York, it was down $2.063, or 3.4 percent, at $57.90. Brent, the international standard, was down $1.72, or 2.7 percent, at $61.96.
The IEA said several years of record high prices have “induced the root cause” of the rout in oil prices in recent months. Production in countries outside of OPEC, such as the US, has surged to its highest growth ever while the growth in demand is at five-year lows. The fall in oil prices gathered pace in late November when OPEC left its output target unchanged.
The agency also dampened expectations that the fall in oil prices will automatically be a boon for the global economy.
“The adverse impact of the oil price rout on oil-exporting economies looks likely to offset, if not exceed, the stimulus it could provide for oil-importing countries against a backdrop of weak economic growth and low inflation,” the IEA said.
It highlighted the impact on Russia, which has been particularly hard hit by the market sell-off.
Others, however, believe the benefit to the consumer outweighs the negatives for energy producers.
In a note last month, Barclay’s estimated that a 20 percent decline in gas prices in the US results in $70 billion of savings for consumers, money that helps restaurants, clothing stores, movie theaters and other businesses that depend on discretionary spending. Gas prices have dropped 30 percent since June, to $2.60 per gallon from this year’s peak of $3.70.
Related reports — Page 11
US tariffs trigger WTO spat escalation
GENEVA: China, Russia and the European Union are among a string of countries asking the World Trade Organization to probe new US steel and aluminum tariffs, the world trade body said Friday.
Washington is meanwhile calling the WTO to investigate a number of retaliatory duties imposed by a range of countries, the agenda for the next meeting of the organization’s Dispute Settlement Body (DSB) showed.
The agenda for the DSB meeting set to be held on October 29 shows that the EU, China, Russia, Canada, Mexico, Norway and Turkey plan to ask for the creation of a panel of experts to review US President Donald Trump’s decision to hit them with tariffs of 25 percent on steel and 10 percent on aluminum.
Marking a departure from a decades-long US-led drive for free trade, Trump has justified the steep tariffs with claims that massive flows of imports to the United States threaten national security.
The tariff spat has escalated into an all-out trade war between the US and China and growing trade tensions between Washington and many of its traditional allies.
The US is meanwhile planning to request that the DSB create another set of expert panels to review the legality of retaliatory tariffs imposed by China, Canada, the EU and Mexico.
The requests, which follow rounds of failed consultations, mark and escalation in an ongoing showdown at the WTO around Trump’s controversial trade policies.
Under WTO regulations, parties in a dispute can block a first request for the creation of an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through.
“Once the panel is established and composed, the EU is ready to demonstrate that the United States’ import duties are WTO-inconsistent and to obtain a ruling that condemns the US and brings relief to the EU industry,” an EU Commission spokesperson said.
The creation of a DSB panel usually triggers a long and often costly legal battle that sometimes takes years to resolve.