Chinese oil consumption could rise after the Olympic Games, contrary to many analysts' expectations, tightening oil markets in coming months and helping to keep prices up, the International Energy Agency (IEA) said in its August oil market report yesterday.
The added impact of damage to the central Asian BTC Pipeline and the outbreak of hostilities between Russia and Georgia may have placed a floor under crude prices following recent declines, the IEA added.
Oil prices are down 23 per cent from their peak near $150 a barrel last month.
"We would hesitate before automatically extrapolating the recent [downwards] price trend," the IEA said. "It looks too early to cite definitively a sea change in the market."
The IEA, based in Paris, is the energy adviser to 27 industrialised countries and its forecasts often contrast with those of Opec, which represents the interests of oil exporters. The IEA has consistently argued for Opec to increase output and bring prices down to protect the developed world from inflation and recession.
The IEA's most recent data suggest that demand for Opec oil supply next year will be 1.1 million barrels per day lower than the group's current output, indicating Opec might need to cut production. It estimated the call on Opec crude next year at 31.1 million barrels per day (bpd), versus the group's recent output of 32.2 million bpd. Chakib Khelil, the Opec president, has called for the group's membership to restore production to their assigned quotas.
The IEA conceded that oil market fundamentals have recently eased, allowing prices to drop substantially over the past few weeks. The agency cut its forecast for global oil demand growth this month by 100,000 bpd from its projection a month ago, with much of the revision stemming from the changing outlook for the US, where it predicted oil consumption would decline 3.1 per cent this year and two per cent next year.
However, Chinese demand is expected to grow by 5.7 per cent next year, slightly stronger than this 5.6 per cent, as consumers in the world's fastest-growing major economy spend more on travel.
"Recent trends in Chinese crude runs suggest a possibility of stronger than expected demand," the IEA said. Fuel use in China could rebound over the next few months as the country lifts temporary measures introduced to curb pollution in Beijing during the Olympics. The Chinese government ordered the temporary closure of a number of oil refineries and coal-fired power plants to improve air quality in the capital before the Games.
On the supply side, the IEA estimated Opec spare production capacity at a narrow 1.5 million bpd in the wake of recent oil production increases, particularly from Saudi Arabia. It revised downwards the demand for Opec oil for the rest of this year because output from countries outside the organisation is expected to rebound strongly towards the end of this year and the early part of the next.
The IEA estimated that Iranian oil production in June and July was higher than it had forecast, with a further output increase of 60,000 bpd expected in September.
In Iraq, political and regulatory bottlenecks are becoming more of an impediment to increased oil supply than security risks, the agency said. With the government shortening the terms of proposed technical service contracts, international oil producers may sit out the opportunity for immediate participation in Iraq's oil sector, preferring to wait for longer-term contracts to be awarded next year, it said.
A number of analysts have recently issued bearish oil price forecasts. VM Group yesterday predicted a further $10 to $15 a barrel drop in crude oil prices due to falling demand amid an economic slowdown in the US.
"Prices have to tumble below $100 before economic sentiment turns around," Mike Cassell and Gary Mead, analysts, wrote in a report.
Lehman Brothers said this week that Asian demand had passed a tipping point and predicted softening prices over the next year.
"One-off" increases in Chinese oil demand due to the Olympic games and power generation shortfalls were set to moderate in coming months, they added.
The price of light crude oil for September delivery dipped to $112.48 a barrel yesterday in trading on the New York Mercantile Exchange before settling near $113 a barrel.
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Company%20Profile
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COMPANY%20PROFILE%20
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The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
COMPANY%20PROFILE
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Afghanistan fixtures
- v Australia, today
- v Sri Lanka, Tuesday
- v New Zealand, Saturday,
- v South Africa, June 15
- v England, June 18
- v India, June 22
- v Bangladesh, June 24
- v Pakistan, June 29
- v West Indies, July 4
Grand slam winners since July 2003
Who has won major titles since Wimbledon 2003 when Roger Federer won his first grand slam
Roger Federer 19 (8 Wimbledon, 5 Australian Open, 5 US Open, 1 French Open)
Rafael Nadal 16 (10 French Open, 3 US Open, 2 Wimbledon, 1 Australian Open)
Novak Djokovic 12 (6 Australian Open, 3 Wimbledon, 2 US Open, 1 French Open)
Andy Murray 3 (2 Wimbledon, 1 US Open)
Stan Wawrinka 3 (1 Australian Open, 1 French Open, 1 US Open)
Andy Roddick 1 (1 US Open)
Gaston Gaudio 1 (1 French Open)
Marat Safin 1 (1 Australian Open)
Juan Martin del Potro 1 (1 US Open)
Marin Cilic 1 (1 US Open)
Company%20profile
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The specs
Engine: 1.5-litre 4-cylinder petrol
Power: 154bhp
Torque: 250Nm
Transmission: 7-speed automatic with 8-speed sports option
Price: From Dh79,600
On sale: Now
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Bugatti Chiron Super Sport - the specs:
Engine: 8.0-litre quad-turbo W16
Transmission: 7-speed DSG auto
Power: 1,600hp
Torque: 1,600Nm
0-100kph in 2.4seconds
0-200kph in 5.8 seconds
0-300kph in 12.1 seconds
Top speed: 440kph
Price: Dh13,200,000
Bugatti Chiron Pur Sport - the specs:
Engine: 8.0-litre quad-turbo W16
Transmission: 7-speed DSG auto
Power: 1,500hp
Torque: 1,600Nm
0-100kph in 2.3 seconds
0-200kph in 5.5 seconds
0-300kph in 11.8 seconds
Top speed: 350kph
Price: Dh13,600,000
Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
Fixtures
Friday Leganes v Alaves, 10.15pm; Valencia v Las Palmas, 12.15am
Saturday Celta Vigo v Real Sociedad, 8.15pm; Girona v Atletico Madrid, 10.15pm; Sevilla v Espanyol, 12.15am
Sunday Athletic Bilbao v Getafe, 8.15am; Barcelona v Real Betis, 10.15pm; Deportivo v Real Madrid, 12.15am
Monday Levante v Villarreal, 10.15pm; Malaga v Eibar, midnight
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
Thank You for Banking with Us
Director: Laila Abbas
Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum
Rating: 4/5
FIVE%20TRENDS%20THAT%20WILL%20SHAPE%20UAE%20BANKING
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Hotel Data Cloud profile
Date started: June 2016
Founders: Gregor Amon and Kevin Czok
Based: Dubai
Sector: Travel Tech
Size: 10 employees
Funding: $350,000 (Dh1.3 million)
Investors: five angel investors (undisclosed except for Amar Shubar)
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Joker: Folie a Deux
Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson
Director: Todd Phillips
Rating: 2/5
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5