Oil Prices - October 19
Posted: Mon Oct 19, 2015 10:48 am
Crude oil futures were under pressure on Monday, after data showed China's economy expanded at its slowest pace since 2009 in the third quarter, underlining concerns over weak demand.
Official data released earlier showed that China’s economy grew 6.9% in the third quarter, slightly better than forecasts of a 6.8% rise but down from growth of 7.0% in the previous three months. The figure is the country's slowest growth rate since the 2009 global financial crisis. A separate report showed that industrial production rose by an annualized rate of 5.7% in September, below expectations for a 6.0% increase and following a gain of 6.1% in the preceding month. Data on fixed asset investment also missed forecasts, reinforcing views that Beijing will roll out further support measures soon for the world's second largest economy.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Saudi Arabia and other Gulf OPEC members have indicated in recent months that they will continue to stick to their policy of defending market share by keeping production high. A meeting of OPEC technical experts in Vienna on October 21 may shed further light on the group's position of maintaining production at current levels as prices remain muted.
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MY TAKE: China's economy is still growing at a rate the U.S. would love to have. Their demand for oil is not going down, but the rate of demand growth may slow just a bit. Keep in mind that only ~20% of China's total energy supply comes from burning oil. Most of the oil is used for transportation fuels. 60% of China's energy comes from burning coal.
Official data released earlier showed that China’s economy grew 6.9% in the third quarter, slightly better than forecasts of a 6.8% rise but down from growth of 7.0% in the previous three months. The figure is the country's slowest growth rate since the 2009 global financial crisis. A separate report showed that industrial production rose by an annualized rate of 5.7% in September, below expectations for a 6.0% increase and following a gain of 6.1% in the preceding month. Data on fixed asset investment also missed forecasts, reinforcing views that Beijing will roll out further support measures soon for the world's second largest economy.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Saudi Arabia and other Gulf OPEC members have indicated in recent months that they will continue to stick to their policy of defending market share by keeping production high. A meeting of OPEC technical experts in Vienna on October 21 may shed further light on the group's position of maintaining production at current levels as prices remain muted.
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MY TAKE: China's economy is still growing at a rate the U.S. would love to have. Their demand for oil is not going down, but the rate of demand growth may slow just a bit. Keep in mind that only ~20% of China's total energy supply comes from burning oil. Most of the oil is used for transportation fuels. 60% of China's energy comes from burning coal.