US needs comprehensive deal with China to remain oil demand driver
Baku, Azerbaijan, July 5
By Leman Zeynalova – Trend:
The US should have a comprehensive deal with China in order to remain the core driver of oil demand, Trend reports with reference to Fitch Solutions Macro Research (a unit of Fitch Group).
“Developed markets outside of the US are registering signiﬁcant declines and will, in our view, continue to do so. April estimates for European total fuels demand declined by 3.1 percent in April from a year earlier. In part, this reﬂects weakened economic performance as political and trade uncertainties drag on conﬁdence and investment, particularly in the manufacturing sector. The declines are also due in part to more structural trends in fuel efficiency gains and a switch away from oil. The US has been a core driver of global oil demand growth over recent years. Recent demand ﬁgures show the US levels picking up in April, but we see sustained gains in demand needing to come from a comprehensive deal with China in order to maintain this momentum,” reads the report of Fitch Solutions.
In its core view, the company sees the US economy stabilise over Q3 and into Q4 as trade risks de-escalate and global stimulus measures start feeding through. “The US is still responsible for almost 28 percent of global demand any growth there will continue to support demand globally.”
EM demand ex-China will increasingly carry the burden of global demand growth, with the outlook on demand in other Asian EMs – notably India and South East Asia – remaining bright, according to the report.
“Although we note recent sharp declines in demand from the EM we still see that over the medium term, oil demand growth will become increasingly broad-based across the region. Commodity-dependent markets have seen growth prospects improving, supporting a stronger demand outlook in Latin America, the Middle East and Africa,” said Fitch Solutions.
It's been more than a year since US President Donald Trump ignited a trade war with China in an attempt to address business practices seen as unfair.
The largest economies have since slapped steep duties on each other's products and threatened to further escalate tensions.
Follow the author on Twitter: @Lyaman_Zeyn