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Komal Sri-Kumar

Commodities Are Sending a Distressing Signal

Professor Oil and Dr. Copper are suggesting all is not well with the global economy.

There’s too much oil and not enough demand.

There’s too much oil and not enough demand.

Photographer: Taylor Weidman/Bloomberg

Oil markets are sending a powerful message. After reaching a four-year high in early October, the price of crude has collapsed by more than 25 percent. This move is about more than just the ups and down of global supplies and whether OPEC and other producers can adjust. More importantly, it seems to speak to waning demand, which is worrisome.

These developments suggest the synchronized growth that the global economy has enjoyed in recent years is likely to be replaced by a generalized slowdown. Just take a look at the data out of Japan and Germany this week, which showed the world’s third- and fourth-largest economies contracted in the third quarter.