Earlier today, the IMF lowered its prediction of global economic growth to 2.2% in 2009, .8% below last month’s estimate and below the 3% marker they use to classify a recession. The major reduction has many banks predicting oil demand will fall next year for the first time in 26 years.
As a result, oil prices dipped toward $60 again, and the average US price of gasoline is fast approaching $2.30 per gallon. It appears ready to fall another 10 cents or so before potentially stabilizing on next week’s IEA report that highlights rapid oil field depletion and as winter heating demand picks up. Yesterday, the weekly US Energy Information Agency (EIA) oil report showed US crude inventories remained around average levels while products such as gasoline, distillates/diesel, and propane remained low. But decreased demand allows these lower levels to suffice for now. If the lower prices bring demand back up then the price would stabilize or even climb a bit.
In natural gas, the EIA reported today that storage for the winter reached slightly above the five-year average but below last year’s record. Our high domestic production keeps US prices lower than the tighter regional markets in East Asia and Europe, especially since lower US industrial manufacturing slows our demand growth.
With the IMF predicting US GDP growth of -.7% in 2009, this is certainly a difficult time for the Obama Administration to take the reins. But it also provides a new beginning, where creative initiatives that drive job growth through efficient and clean energy technology can keep cutting our greenhouse gas emissions even as our economy churns toward recovery in late 2009.
Tags: global recession, Natural Gas, Obama, Oil