Despite manufacturing overcapacity and weak domestic demand, China's GDP growth rate improved in Q2. Oil consumption was up and crude imports reached a new record in August. But August also saw Chinese industrial output expansion drop to a 5-year low and exports growth slow, prompting fresh economic stimulus. China deepened energy ties with Russia to increase energy security.Oil Market Snapshot
Brent declined to a two-year low of c. $97/bbl and ICE Brent Futures contango deepened. We have slashed our oil price forecast to $104.66/bbl on average for 2014 and to $98.08/bbl for 2015. The revision is prompted by a shift in the futures market and a stronger US Dollar. Excess oil supply weighs on short term oil prices, partly offset by Middle-Eastern turmoil and production cuts. Longer-term, we see strong fundamentals with a tight oil market as investment in capacity slows.India Oil Products and Natural Gas Analysis
Diesel deregulation only briefly curbed Indian oil products consumption, demand increased again after the new government was voted in. Gasoline and diesel demand is expected to rise whereas fuel oil and kerosene to fall. India’s domestic gas production continues to lag as gas market price reforms have been postponed until end of September.
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