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Dallas Fed Cautions About Impact of Falling Oil Demand on US Economy

According to estimates by the Dallas Fed, capital spending by energy companies in the US has reduced as a result of the ongoing coronavirus pandemic and could fall by at least another 30%, which could have a severe impact on the country’s economy in the coming months. As a result of the shutdowns, oil demand had declined by as much as 30%, causing a crash in US oil prices during March and April.

However, consumers have been unable to make the most of falling oil prices as demand remains subdued due to the continued shutdown conditions. As a result, the drastic fall in oil prices and oil demand has forced US energy companies to resort to curtailing their spending plans and reducing production.

In its article, the Dallas Fed observes, “The sharp reduction in capital expenditures by oil companies explains why this oil price decline, on balance, actually hurt U.S. investment spending – and hence, economic growth – not only in oil-producing regions, but overall.”

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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