Separately, he notes: “The secular move away from fossil fuels should also over time be expected to put downward pressure on oil prices.”
He explains: “Everyone knows that in terms of money being pumped into renewable energy, there is certainly quite a lot at present, thereby causing the demand for fossil fuels to decline.
“In the past, oil prices have gone from $150 down to $30, this may not be due to a secular trend but to some extent, it may have been.”
Nevertheless, oil price spikes continue to present a key macroeconomic risk, having preceded all but one US recessions since 1950, points out Mr Teschmacher.
He says: “It is, therefore, a commodity we watch closely because of the knock-on effects it can have for broader economic activity and asset prices.
“The oil price remains very sensitive to supply so a disruption at a major producer could send prices soaring above $100.”
However, prices as high as that are not his base case.
He continues: “Equally, a global recession would likely see prices collapse below $25, but we do not expect that for 2019.
“Our base case for oil prices is to be range bound because the major oil suppliers in the world put an effective floor and ceiling on prices.”
victoria.ticha@ft.com
