April Trade Outlook
What does trade tell us about the oil price? In the first Trade Outlook of 2017, we pointed to a somewhat negative outlook for oil prices. Although analysts at the time saw prices increasing as demand recovered and production stayed at similar levels, based on our trade forecast for oil, we felt that the picture was at best neutral and maybe slightly negative. This was in line with OECD thinking but the World Bank and the EIU at the time were both suggesting that prices would rise.
The reason for the more negative outlook that we had at the time was because of the very high correlation between world trade values and the oil price (Figure 1). This correlation, of 90%, does not tell us how the oil price will move. It simply tells us that it is highly correlated with trade values, which is reasonable since oil is the world’s third largest traded sector with a value of $1.9 trillion in 2015. However, it does tell us that if trade is projected to remain static, then there is a greater likelihood that oil prices will also remain static.
Figure 1: Monthly value of world trade in oil (USDm) vs oil spot price (last price monthly), Jan 2010-Jan 2017
Source: Equant Analytics, 2017
Read the rest of the April Trade Outlook here
- Equant Analytics provides you with reliable trade data. Browse through 12,800 products and sectors across 200 countries. Our Trade data has been mirrored using OECD techniques, ensuring a consistent level of accuracy. The reliability and accuracy of our data set enables unparalleled insight into global trade flows. The issue with trade and trade finance data is that country and international data very rarely aligns. There are widespread issues in the reporting of, collection and processing of trade data which makes it difficult to make informed business decisions.
Dealing with the most challenging data issues
Countries tend to under-report
Our Solution: Data is mirrored using OECD techniques to ensure it is complete.
Our Solution: Nominal values reported in USD using IMF/WTO average FX rates.
Confidential data can be suppressed
Our Solution: As our data is updated monthly, reporting inconsistencies are identified quickly.
Inclusion of services
Our Solution: Service data averages from OECD, Eurostat and UN sources are mirrored and refined to form a more accurate picture.
SITC versus HS codes
Our Solution: We collect and report Data in both SITC and HS codes.
Country exports do not equal imports
Our Solution: Data is calibrated so that exports equal imports for all flows (i.e. UK exports to US = US imports from UK).