VScurious atmosphere at the beginning of summer. Usually, everyone packs their bags whistling, fills the trunk of the car, picks up the kids, and off to the holidays. Here we call it the great departures, in the United States it is the driving season. We are engulfed in traffic jams and queuing at gas stations. Economists then scrutinize the demand for gasoline, and later for oil, which is supposed to soar. This is not at all what we saw during the first holiday weekend in America, that of the national holiday, July 4th. Fuel prices, instead of rising, suddenly began to fall. And oil prices have come down. After months of rising, prices fell by nearly 10% for Brent North Sea and by more than 8% for WTI, the American indicator. It even fell below the symbolic threshold of 100 dollars (97 euros) for the first time since May 11.
May 11 is not a very distant date, and international tensions have propelled oil and gas prices to exceptional heights. A little cooling is therefore welcome. But what is changing, in this first week of July, is much deeper. It is the feeling of investors that the recession is approaching and that we should fasten our belts. In Europe, this is evident due to the rationing of gas supplies imposed by Russia, but it is also increasingly significant in the United States.
A not very peaceful comeback
Even shipping carriers confirm a slowdown in deliveries, while at the moment traders are supposed to be ordering for next Christmas sales. In a note dated July 4, the chief economist of BNP Paribas, William De Vijlder, notes that the financial directors of American companies, questioned by Duke University (North Carolina), now anticipate a recession and are ready to lower their spending in the event of a rise in interest rates.
The US central bank’s credit-tightening policy is beginning to have an effect on people’s minds, especially when refueling. This diffuse, but increasingly clear, impression of a coming recession and therefore of an upcoming drop in demand, is already influencing oil prices. This demonstrates once again the dependence, not very ecological, of our economies on black gold and gas, but also, conversely, the sensitivity of prices to the economic situation. If they rise, this slows down the economy and fuels inflation, but if they rise too much, the anticipated recession lowers demand and therefore prices. If we add to this the rise in wage demands at a time when the bosses are beginning to worry, the season of major departures does not bode well for a peaceful return to school. Neither at OPEC nor in the streets of Paris.