Economy Watch: Demand Growth for Oil Slows Worldwide

By Dees Stribling, Contributing Editor

In its Oil Market Report for September, which was released on Thursday, the International Energy Agency has lowered its forecast for global oil demand for the third month running. The agency, which an autonomous organization formed by 29 member countries, called the recently drop in demand “nothing short of remarkable.”

The IEA now predicts that oil demand growth for 2014 and 2015 will be 900,000 barrels per day and 1.2 million barrels per day, respectively, because of a sizable slowdown in demand growth during the second quarter of this year. As recently as July, the agency predicted demand growth in 2014 would be 1.2 million barrels per day.

Oil demand growth in Q2 2014 was at its lowest in two-and-a-half years because of economic weakness in Europe and China, a trend the IEA expects will continue to hurt demand. Saudi Arabia finally appears to be responding to the lower demand outlook, cutting oil output by 330,000 barrels per day last month; it appears to have run below 7 million barrels per day for the last four months, the kingdom’s lowest level since Sept. 2011.

Service industry revenues rise

The Census Bureau released its quarterly estimates for various U.S. service industry revenue on Thursday. In real estate, revenue for the second quarter of 2014 was $127.7 billion, up 7.7 percent from the first quarter, and 5.1 percent compared with a year ago. Accommodation revenue came in at $57.3 billion for Q2 2014, up 12.2 percent from Q1 2014, but down 0.5 percent from the second quarter of 2013.

Transportation and warehousing revenue was $217.9 billion in Q2 2014, up 8.7 percent quarter-over-quarter and 6.4 percent year-over-year. In health care, estimated revenue for the second quarter of 2014 was $565.6 billion, an increase of 3 percent from the first quarter of this year and 3.7 percent from the second quarter of last year.

Separately on Thursday, U.S. Department of Labor said that for the week ending Sept. 6, initial unemployment claims came in at an annualized 315,000, an increase of 11,000 from the previous week. The previous week’s level was revised up by 2,000 from 302,000 to 304,000. The four-week moving average was an annualized 304,000, an increase of 750 from the previous week.

Wall Street ended the day mixed, with the Dow Jones Industrial Average losing 19.71 points, or 0.12 percent. The S&P 500 and the Nasdaq, by contrast, were up 0.09 percent and 0.12 percent, respectively.