China’s exports rose only 1% in July, another sign of a sharp deceleration of economic activity around the world. Imports moved higher by 4.7%, so at least there is some hope this will fuel future growth in Chinese factory production or activity by China’s huge middle-class consumer population, which numbers 200 million. China’s trade surplus for the month was $25.1 billion. No matter how economists want to spin the surplus number, the export figure cannot be explained or argued away. As China is the world’s second-largest economy based on gross domestic product, and the world’s manufacturing stronghold, a problem with its exports is a clear sign that its major trade partners, including the United States, the European Union and Japan, have fallen into deeper and deeper economic holes.

IEA Oil Demand Forecast

The International Energy Agency (IEA) report on oil demand was another signal of a global economic slowdown that is now likely to last through 2013. In its August Oil Market Report (OMR), the agency said it cut:

2012/2013 oil demand expectations by 300-400 thousand barrels per day (kb/d), although annual growth remains in an 800-900 kb/d range both years. This follows baseline data revisions and a weaker economic prognosis for 2012/2013.

The goal of the monthly document is to supply information on the international oil market and projections for oil supply and demand 12 to 18 months ahead. The IEA mentioned that oil prices have remained relatively high because of modest stockpiles and concerns about trouble in Iran. If and when those issues begin to disappear, prices should begin to soften. Although the IEA does not make a forecast, this series of events should combine to bring down oil prices, as well as those of byproducts like gasoline and petrochemicals. And that should in turn be some relief as the world economy dips for the second time in five years.

Gas Prices Up Year-over-Year

AAA Fuel Gauge data show that gasoline prices are higher than a year ago for the first time since April. The report shows the average price nationwide for a gallon of regular was $3.673 yesterday. A year ago, the figure was $3.637. By way of comparison, the price of gas was $3.567 a week ago and $3.383 a month ago. The surge in gas prices, which began two weeks ago, appears to have slowed for now. The nationwide average does not mean much for drivers in some states. The price in California was $3.986, pushed higher by the Chevron Corp. (NYSE: CVX) refinery explosion. Prices in Alaska, Illinois, Hawaii, Wisconsin and Michigan were more than $3.90 — probably driven by the lack of refinery facilities in these states.

Methodology: Every day up to 120,000 stations are surveyed in cooperation with Wright Express for unmatched statistical reliability.

Douglas A. McIntyre

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