Crude prices at $106/barrel and above, if sustained for a year, will likely erode world oil demand, top analysts at Societe Generale said Friday. The figure is today's equivalent of price levels reached during the second oil shock, the heads of commodity research and oil research at SocGen, Frederic Lasserre and Mike Wittner, told Platts in Singapore.
An "oil burden index" that the analysts evolved using the oil bill as a percentage of nominal GDP showed $85/b at today's price, accounting for the efficiency gains of the past 30 years, was the "beginning of pain" and corresponded with the first oil price shock.
Business activity in the 13 nations sharing the euro slowed to the lowest level in 27 months driven by weakness in the services sector, according to a survey on Friday. First results for NTC Research's survey of business leaders fell to 53.8 points in November, down from 54.7 points in October, touching the lowest level since August 2005.
"The further fall in the eurozone PMI index in November is another signal that gross domestic product growth will slow in the fourth quarter," said economist Jennifer McKeown at Capital Economics.
Updated: November 23, 2007
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