Crude oil trading could result in the price of the commodity experiencing substantial gains if the predictions of widespread economic growth provided by market participants end up having some accuracy.
The forecasts that have been made about how well global business conditions will fare in 2014 and after could play a key role in the performance of crude oil, as the expectations that investors have for the worldwide economy are a crucial contributor to the price of the commodity.
The global economy should expand more rapidly this year than it did in 2013, at least according to the most recent estimates released by the International Monetary Fund in the latest update to its World Economic Outlook.
IMF bolsters 2014 global growth estimate
The organization forecast that in 2014, gross domestic product will grow at a rate of 3.7 percent. This figure was 0.1 percent higher than the estimate that it provided in the prior update to the WEO, which was made in October. In addition, this pace will hasten slightly in 2015, reaching an annual rate of 3.9 percent.
While the financial institution increased its forecast for global growth, a recent poll conducted by Bloomberg revealed that the majority of participants believe that the global economic outlook is getting better. The survey, which involved close to 500 traders, investors and analysts who subscribe to the media outlet, revealed that 59 percent of participants had this optimistic view.
“Developed countries are playing by far the most important part of the recovery in confidence, in markets and in the economy,” Wilhelm Schroeder, who works in Munich as managing director of Schroeder Equities GmbH and contributed to the poll, told the news source. “Without doubt, confidence is the single most important determinant for growth.”
Growth forecasts increased for several nations
The IMF also increased its growth predictions for the economies of several nations, including that of the U.S., Reuters reported. The organization forecast that in 2014, the GDP of the world’s largest economy would grow at a rate of 2.8 percent.
Such growth would certainly represent an improvement, as the nation’s economy expanded at a 1.9 percent pace in 2013, according to figures provided in the IMF report. The document released by the organization noted that declining headwinds from fiscal policy, and the subsequent impact that this should have on domestic demand, will help speed up the U.S. recovery.
Conference Board provides encouraging data for U.S.
This prediction that the American economy will grow more quickly in 2014 is supported by a December measure of leading indicators for the North American nation, Bloomberg reported. Data provided by the Conference Board revealed that during the month, the organization’s outlook for the coming three-to-six month period was 0.1 percent higher than the most recent rendition.
“It’s still consistent with a stronger economy in 2014,” Scott Anderson, who works in San Francisco at Bank of the West as chief economist, stated before the report was released, according to the news source. “We expect a healthier consumer, better business spending and somewhat faster job growth.”
The perception that economic conditions are improving was also supported by the most recent jobless claims report, which was released on Jan. 23, and revealed that during the prior week, the number of people who filed initial applications for these benefits lingered close to its lowest in six weeks, according to the news source.
The labor market is seen by many as being a key indicator of the strength of the economy. The improvement in this crucial measure was noted by Jim Diffley, a senior director at IHS and also the lead author of a report on U.S. metropolitan areas that was recently released, according to USA Today. The document, which was generated by IHS Global Insight, forecast that in 2014, 356 of the 363 metropolitan areas will expand.
“We’re finally on an upward trajectory with good job growth,” Diffley told the media outlet. “The recovery has started to affect substantially everywhere.” He added that many regions will need to recover substantially to get back to the level they were at before the financial crisis. “Two thirds of metros have still not gotten back to 2007 or 2008 peak levels of employment, and half of those won’t get there for another three years,” Diffley told the news source. “Financial crises do not produce normal recessions in the U.S.”
Additional data provided by the Conference Board pointed to the U.S. economy being strong at the present time, according to Bloomberg. The December index of coincident indicators released by The Conference Board was 0.2 percent higher than during the month before.
“This latest report suggests steady growth this spring, but some uncertainties remain,” Ken Goldstein, who works for the Conference Board as an economist, said in a statement today, the media outlet reported. “Business caution and concern about unresolved federal budget battles persist, but the better-than-expected holiday season might point to
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