Charts of Oil demand and supply continue to indicate this is a supply problem with modest growth in demand. US and China filling of reserves years ago might have exacerbated things overstating demand, but there is demand growth.
Well, what about other commodities. They are collapsing!!! Oh no, the Fed-induced growth, the China-related growth; it is all dead!!!!!WE ARE DOOMED! Zerohedge tells us so. Fed is faking bank reports..........
Hold on, hold on. There is a reasonable explanation for some of this. China was importing so much of these that they wanted to ensure supply. The filled up lots of warehouses. Therefore, demand was say 1.1x real demand. Now assumin growth fell to zero, if overstocking stopped, you have 10%, well actually 9%, contraction in demand, not to mention what happens if reserves are drawn down. Additionally, China is switching from industrial growth to consumer-led products and services. No one disputes US mfg is un a recession. Well, even if China mfg is growing just above zero, other growth could still get you to 3-5%, still fast growth for the world's largest/2nd largest economy! You see, I do not believe 7%. I also do not believe, but am concerned by reports of zero energy usage growth last year - I presume some solar/wind stuff may get reported as negative demand and there was pressure to close high pollution small producers (who may have lied!) so still possible some growth there.
Jon |
