Chinese Growth Puts Oil Under Pressure

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 percent 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.

Via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza