Coming 'oil glut' may push global economy into deflation

Article link: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10575292/Coming-oil-glut-may-push-global-economy-into-deflation.html

Excerpts:
One piece of the jigsaw puzzle is missing to complete the deflation landscape across the West: a slide in oil prices. This is becoming more likely each month.
Turmoil across the Middle East and parts of Africa has choked supply over the past two years, keeping Brent crude near $110 a barrel despite a broader commodity slump. Cotton and corn prices have halved, as has the UBS index of industrial metals. Such anomalies rarely last.
"We estimate that crude oil is now the mostly richly priced commodity in the world," says Deutsche Bank in a fresh report.
Michael Lewis, the bank's commodity strategist, said markets face an "new oil supply glut" as three forces combine. US shale will add 1m barrels a day (b/d) to global supply for the third year running; Libya will crank up shipments after a near collapse in 2013; and Iran will come out of hibernation. "This will push OPEC spare capacity to levels last seen in the depths of the financial crisis in 2009," he said.

The risk is that it will "unhinge" inflation expectations as the headline rate keeps dropping. Half of Europe already has one foot in deflation, with prices falling over the past five months once austerity taxes are stripped out. Any shock at this point could start to frighten the horses.







Revelation 6:6
English Standard Version (ESV)



⁶ And I heard what seemed to be a voice in the midst of the four living creatures, saying, “A quart^[a] of wheat for a denarius,^[b] and three quarts of barley for a denarius, and do not harm the oil and wine!”

Footnotes:

1. Revelation 6:6 Greek choinix, a dry measure equal to about a quart
   
2. Revelation 6:6 A denarius was a day's wage for a laborer