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IEA cautious on global oil demand growth in 2016

Published Wednesday, October 14th, 2015

News from China did not cheer the markets yesterday. Imports in dollar terms fell in September by 20.4% year-on-year and this morning comes news that consumer price inflation rose by a less-than-expected 1.6%. More alarmingly for those worried about a global deflation contagion Chinese producer prices fell by 5.9%, the 43rd consecutive month of declines.

German investors and analysts are not happy either. Quite apart from being loaded up with VW cars of their own they are worried about the impact it will have on the economic outlook for Germany. This month’s ZEW survey showed economic sentiment falling to 1.9 points in October from 12.1 in September, and well below expectations. How serious is 1.9? It has been as high as +60 and as low as -20 in the last 3 years so perhaps not mega serious in the grand scheme of things. It is however well below the long term average which runs at 24.

Oil prices moved higher yesterday but were knocked back closing well below the day’s high at $50.70/bbl on Brent (-0.62) and at $48.43/bbl on WTI (-0.44). The EIA reports that US shale production will fall for the seventh consecutive month in November putting production at 5.12 mbpd, down from the year’s high of 5.54 mbpd in April. North Dakota’s production is only 100,000 bpd off this year’s high and the director of mineral resources believes that the state’s 10 largest producers can maintain current production levels with WTI at $50/bbl

to read the rest of the report, please click here

Posted by David Hufton