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China’s Outlook Improving

Today’s markets are heading in all directions. The US markets closed slightly up with futures on the S&P index down. Oil prices are up after falling last night. Brent is now up by 1.5% to $51.02.

Yesterday’s Brent fall stood at around 5% and OPEC can be said to be to blame for this. The cartel again exceeded its set extraction quota in September and pumped out around 31.57 million barrels per day (+0.11 million barrels). Other than this, monthly OPEC research indicated that 2016 demand for oil will increase to 30.82 million barrels per day (+510,000 barrels in relation to current indicators). However, supply from non-OPEC member states is falling; a special mention here for US production falling rapidly.

Chinese customs officials have announced that exports have fallen in September by 1.1% YOY after a 6.1% in August. Imports fell by 17.7% in CNY after a 14.3% fall in August. China’s positive balance of trade for September increased to 376.2 billion yuan against a previous 368 billion in August.

The data indicates an improvement in global demand for Chinese goods, although the demand is still falling and therefore indicating the difficulties which manufacturers in the country are facing. A fall in imports indicates that Chinese demand for goods is falling.

The Chinese state expects annual GDP to be at around 7% this year. This is the lowest growth rate for the last quarter century. However, the country will find it difficult to achieve this figure with weak export demand, further falls in the cost of real estate and a growth in unsecured credit at the largest state banks and at local level. Figures for Q3 will be published on 19th October.

At the same time, Chinese imports of oil in September increased by 1.4% YOY to 27.95 million tonnes and this indicator has thereby risen by 8.8% to 248.62 million tonnes.

The International Energy Agency (IEA) has announced that there is likely to be an excess of supply in oil again next year, even though they expect demand for the fuel to increase by 1.2 million barrels per day in 2016.

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