Oil prices dip below USD 40 a barrel: good news for the global economy

CHART OF THE WEEK

OIL PRICES DIP BELOW USD 40 A BARREL

The OPEC’s (Organisation of Petroleum Exporting Countries) decision not to cut its production target at the meeting on December 4th has resulted in renewed downward pressure on oil prices which have now dipped below USD 40 a barrel, their lowest since late 2008/early 2009, triggering new concerns over global growth.

 

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OUR ANALYSIS

Good news for the global economy

These very low oil prices are chiefly explained by overabundant supply, as illustrated by our chart of the week. In fact, according to the International Energy Agency (IEA), demand for oil is rising at the fastest pace since 2010.

Whilst many of the benefits stemming from the 2015 oil price falls were undoubtedly offset by reduced investments in the sector, the resulting increase in consumer purchasing power leads us to believe that this decline in oil prices remains good news for the global economy.

 

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Julien-Pierre Nouen

Directeur des études économiques et de la gestion diversifiée