Recession in US Economy to Cause Drop in Mineral Oil Prices in Europe: American Expert
Azerbaijan, Baku, 21 February / corr. Trend A. Badalova/ The declining economy of U.S. will certainly result in the reduced demand. This will impact Europe through the crude oil prices and product markets, Andrew Reed, the expert on oil market of the US Energy Securities Analysis (ESAI) analytical company said to Trend on 21 February.
"The declining economy of U.S. will certainly result in the reduced demand. This will impact the Europe through crude oil prices and product markets. Decreased demand will weaken the crude oil prices," Reed said.
Europe consumes some 1bln tons of oil per year.
The growth rate in US economy has caused an alarm among the investors. The great majority of the depressing financial accounts of the large companies show that the economic recession in US is unavoidable. The big investment bank of US Goldman Sachs expects the recession to take place in 2008.
According to ESAI analyst, Europe does not produces enough Diesel to supply in its own domestic market, so it relies on the imports, especially during the summer driving season. The U.S., which produces a high quality diesel, can meet some of the Europe's shortfall. Softer demand in the U.S. will free up increased volumes of diesel for exports to Europe.
"Thus, the affect will be, to provide some relief to Europe's generally tight market during the summer. As a result, diesel prices will not be as high in Europe," he said.
Europe produces a large surplus of gasoline- a large amount of which is exported to the U.S. If the U.S. absorbs less European gasoline (due to weak demand growth), European gasoline fundamentals will be even weaker than expected. Thus, gasoline prices will also fall, the ESAI analyst said.