Oil Demand Recovery Supports Stock Market’s Bullish Momentum
- Oil demand has accelerated at faster pace than post-GFC
- Could signal stock market momentum was right after all
The stock market’s speedy recovery from the 2020 crash and the more-or-less steady ascent ever since has been hailed as not only historic, but a sign of overheating. Yet perhaps stock bulls were right after all, at least according to oil demand as an indication of economic growth.
Today’s Chart of the Day shows oil demand during the last 16 years, encompassing both the 2008 and 2020 market recessions. As a proxy for global economic growth, rising oil demand is a no-brainer after a recession. Oil demand has traditionally taken about two years to recover its recession-driven losses, a trend that applies to both the post 2020 and 2008 rebounds. But the magnitude of the pandemic-era bounceback sets this time apart from the global financial crisis. It’s only taken about two years to recover oil demand that was 10 years in the making. That’s demonstrated by the steepness of the more recent demand recovery versus the prior one, as illustrated by regression lines.