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Ross McCracken

Ross McCracken

Ross is an energy analyst, writer and consultant who was previously the Managing Editor of Platts Energy Economist

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Oil Demand Destruction: A Trade War Reality

Chinese-US trade figures in August came in well below expectations illustrating the negative impact of the ongoing trade war. Chinese exports to the US in August were down 16%, while imports from the US dropped by 22%. Overall, Chinese exports fell 1% year on year, the biggest drop since June, when they slumped 1.3%.

However, Beijing and Washington have agreed to restart trade negotiations in early October with officials already attempting to lay the groundwork.

The problem is we have been here before only to see the talks break down and the US escalate the war with new tariffs, against which China then retaliates. New talks are positive, but only if they produce a positive result.

Another problem is that time has taken its toll.

Already back in June, the World Bank revised down its forecast for global GDP growth to 2.6%, creeping back up to a still meager 2.7% in 2020 and 2.8% in 2021. In early September, BP chief financial officer Brian Gilvary forecast that global oil demand would rise by less than 1 million b/d this year as consumption slows.

In its latest Short-Term Energy Outlook, the US Energy Information Administration has also cut back its forecast for growth in global liquids consumption this year from 1.0 million b/d to 0.89 million b/d. Growth in 2020 is forecast at 1.4 million b/d. This has to be set against growth in non-OPEC supply of 2.18 million b/d in 2019 and 2.21 million b/d in 2020.

Weak demand undermines OPEC’s…




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