… and not a moment too soon.
It’s been quite a couple of days for oil prices, with front month WTI crude hitting $110 on Thursday for the first time in more than two years:
Why? Take your pick: Gaddafi making gains in Libya, Nigerian elections, a good day of economic news in the US (initial weekly jobless claims down, consumer credit up andsame-store sales beating expectations), or something else.
No idea, though it does seem the right occasion to link to chapter 3 of IMF’s latest World Economic Outlook. The chapter is titled “Oil Scarcity, Growth, and Global Imbalances”, and its main point is sobering indeed:
The increases in the trend component of oil prices suggest that the global oil market has entered a period of increased scarcity. The analysis of demand and supply prospects for crude oil sug- gests that the increased scarcity arises from contin- ued tension between rapid growth in oil demand in emerging market economies and the downshift in oil supply trend growth. If the tension intensi- fies, whether from stronger demand, traditional supply disruptions, or setbacks to capacity growth, market clearing could force price spikes, as in 2007–08.
The report does not include the use of the word “transitory”.
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