The latest warning hit on Tuesday morning when the IMF released their latest update for the global economy for 2013 and 2014. The global economy is expected to continue mending gradually, says the International Monetary Fund (IMF), whose latest forecast of economic growth projects 3.3% growth in 2013, and 4% in 2014. But with old dangers remaining and new risks emerging, policymakers cannot afford to relax their efforts. The report forecasts real global GDP growth of 3.3% on an annual average basis in 2013, about the same as the 3.2% growth seen in 2012, and the IMF expects growth to rise to 4% in 2014. As shown in the following table the IMF has lowered its projections for economic growth for 2013 compared to its January forecast for just about country/region shown in the table including China.
Although the IMF is still expecting global GDP to be positive, they are now expecting the global economy to perform at about the same level as it did in 2012. The global economy is now not expected to expand in 2013 versus 2012 and thus oil demand growth is going to have limited upside. Overall the IMF report was another bearish shot and one that again is supporting the view that oil and most commodity demand is going to expand very slowly and likely to not grow as much as had originally been forecast at the beginning of the year.
So, yes, we had a recovery in some risk asset markets on Tuesday but most of the commodities in the oil complex continued to decline (exception WTI showed a small gain) with Brent trading below the $100/bbl level on an intraday basis for the second day in a row. At the moment the oil complex is in a technical downtrend with the fundamentals being driven by a deteriorating demand projection in a robust supply environment. For now there is no immediate reason… other than short covering… to suggest that oil prices are ready for strong move to the upside.