Japan’s economy shrunk for the second consecutive quarter in Q3, pushing the country into a technical recession, data showed Monday, 17 November 2014.
This is not good news for oil demand with an already lacklustre global appetite for the commodity.
With practically no domestic production, Japan imports all of its oil needs.
Official data shows that oil consumption in Japan was indeed at very low levels in Q3:
- Japan July-September oil demand for power falls below pre-quake level for first time (Platts)
- Japan Tepco used 30,000 b/d of oil in Oct, lowest for month since 2010 (Platts)
The latest data earlier this month showed that energy demand has been trending lower into Q4.
Total electricity generated and purchased across the top ten utility companies in October 2014 dropped by 3.6% from October 2013, as cooler temperatures tempered demand for air-conditioning, according to the data.
Following the news of Japan’s recession, oil prices have gone further down this morning, but from already very low levels . For Brent, we seem to be settled at the well below $80/bbl mark for now.
The press is full of snapshot analyses of the situation: Japan third-quarter GDP shrinks, Abe likely to delay tax hike
And here is some background from the last week from the FT’s Japan editor, David Pilling: Abe is a man on a mission – destination unknown.
Japan recession 2014