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Sunday, October 4, 2015, Aswin 19, 1422 BS, Zilhaj 19, 1436 Hijr


Uncertainty about China hangs over oil rebalancing
Published :Sunday, 4 October, 2015,  Time : 12:00 AM  View Count : 14

LONDON, Oct 3: Substantially lower oil prices are on the way to rebalancing the oil market, as demand accelerates and both shale and other non-OPEC oil production turns down.
But how quickly the rebalancing is completed depends critically on whether rapid demand growth reported in the first half of 2015 can be sustained in the second half of the year and into 2016.
A fragile global economy threatens the progress of rebalancing, Gary Ross, chief of PIRA Energy Group, told the Financial Times in an interview published on Wednesday.
Global oil demand is forecast to rise by 1.7 million barrels per day (bpd) in 2015, according to the International Energy Agency (IEA), which would be the fastest annual increase for five years.
The secretariat at the Organization of the Petroleum Exporting Countries (OPEC) pegs demand growth at 1.5 million bpd in 2015 compared with 2014.
The U.S. Energy Information Administration (EIA) is more cautious and puts demand growth at just 1.2 million bpd.
In a measure of the uncertainty surrounding consumption, the gap between the highest and lowest forecasts is equivalent to 0.5 million bpd, 30-40 per cent of the entire projected increase in demand.
All three major statistical agencies forecast China will contribute about one quarter of global demand growth in 2015, underscoring the country's critical importance to the oil market.
But China also remains the biggest source of uncertainty because it accounts for such a high share of growth yet its economic outlook is so hard to forecast and its fuel data are so opaque.
The impact of any slowdown in China would be magnified because of its trading links across the whole Asian region.
"A riddle, wrapped in a mystery, inside an enigma," is how Britain's wartime prime minister Winston Churchill described Russia in 1939, but it could equally apply to China's oil demand in 2015.
China's actual fuel consumption a matter of guesswork. EIA forecasts China's oil consumption will increase by around 300,000 bpd in 2015, less than 3 per cent. The IEA and OPEC put the increase slightly higher at around 400,000 bpd.
All three agencies forecast demand will grow by 0.3-0.4 million bpd in 2016, according to monthly projections published in September 2015.    ?Reuters









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