Oil prices were stable on Friday, held back by a strengthening U.S. dollar but supported by China&#39;s relentless thirst for crude amid the OPEC-led supply cuts that have already tightened the market this year.

US&nbsp;West Texas Intermediate (WTI) crude futures were at $56.68 a barrel at 0535 GMT, virtually unchanged from their last settlement at $56.69.&nbsp;Brent crude futures, the international benchmark for oil prices, were steady at $62.20 a barrel.&nbsp;

Traders said a stronger dollar, which has gained 0.9 percent this month against a basket of other leading currencies, was weighing on prices.&nbsp;A rising greenback attracts financial traders who switch investments in commodity futures and foreign exchange. A strong dollar is also seen by many as a brake on crude prices, as it makes dollar-denominated oil purchases more expensive in countries that use other currencies.

&quot;A strong U.S. dollar could act as a headwind to commodities&quot;, Bank of America Merrill Lynch (BoAML) said in its 2018 outlook.&nbsp;Despite this, China&#39;s booming oil demand will overtake the United States as the world&#39;s biggest crude importer, this year.

China&#39;s crude oil imports rose to 37.04 million tonnes in November, or 9.01 million barrels per day (bpd), the second highest on record, data from the General Administration of Customs showed on Friday.&nbsp;&quot;China&#39;s crude oil imports will continue to rise over the coming years, as output declines from several of its giant onshore fields... This will inevitably see China become more reliant on crude oil imports over our forecast period, with import dependency set to increase from a record 68.0 percent in 2017 to nearly 80 percent by 2021&quot;, BMI Research said.

Bank of America Merrill Lynch, meanwhile, said healthy global demand and tight supplies should see Brent crude oil rise to $70 per barrel by mid-year.&nbsp;U.S. investment bank Jefferies said it expects 2018 global oil demand growth of 1.5 million bpd, driven by near 10 percent demand growth in China.&nbsp;

On the supply side, oil prices have been receiving support from the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC producers, most importantly Russia, which has been withholding supplies to tighten the market.&nbsp;Largely because of these voluntary production cuts, oil prices rose sharply between June and October, with Brent gaining around 40 percent in value.

Threatening to undermine OPEC&#39;s goal to tighten markets is U.S. oil production, which has risen by more than 15 percent since mid-2016 to 9.7 million barrels per day (bpd), the highest level since the early 1970s and close to the output of top producers Russia and Saudi Arabia.&nbsp;The EIA monthly data on U.S. crude production published November 30 was also somewhat bearish.

Oil prices in the world were stable on Friday as China's thirst for crude countered continuously strengthening U.S. dollar. It is speculated that China's booming oil demand will result in it becoming the world's biggest crude importer

Oil prices were stable on Friday, held back by a strengthening U.S. dollar but supported by China's relentless thirst for crude amid the OPEC-led supply cuts that have already tightened the market this year. US West Texas Intermediate (WTI) crude futures were at $56.68 a barrel at 0535 GMT, virtually unchanged from their last settlement at $56.69. Brent crude futures, the international benchmark for oil prices, were steady at $62.20 a barrel. Traders said a stronger dollar, which has gained 0.9 percent this month against a basket of other leading currencies, was weighing on prices. A rising greenback attracts financial traders who switch investments in commodity futures and foreign exchange. A strong dollar is also seen by many as a brake on crude prices, as it makes dollar-denominated oil purchases more expensive in countries that use other currencies. "A strong U.S. dollar could act as a headwind to commodities", Bank of America Merrill Lynch (BoAML) said in its 2018 outlook. Despite this, China's booming oil demand will overtake the United States as the world's biggest crude importer, this year. China's crude oil imports rose to 37.04 million tonnes in November, or 9.01 million barrels per day (bpd), the second highest on record, data from the General Administration of Customs showed on Friday. "China's crude oil imports will continue to rise over the coming years, as output declines from several of its giant onshore fields... This will inevitably see China become more reliant on crude oil imports over our forecast period, with import dependency set to increase from a record 68.0 percent in 2017 to nearly 80 percent by 2021", BMI Research said. Bank of America Merrill Lynch, meanwhile, said healthy global demand and tight supplies should see Brent crude oil rise to $70 per barrel by mid-year. U.S. investment bank Jefferies said it expects 2018 global oil demand growth of 1.5 million bpd, driven by near 10 percent demand growth in China. On the supply side, oil prices have been receiving support from the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC producers, most importantly Russia, which has been withholding supplies to tighten the market. Largely because of these voluntary production cuts, oil prices rose sharply between June and October, with Brent gaining around 40 percent in value. Threatening to undermine OPEC's goal to tighten markets is U.S. oil production, which has risen by more than 15 percent since mid-2016 to 9.7 million barrels per day (bpd), the highest level since the early 1970s and close to the output of top producers Russia and Saudi Arabia. The EIA monthly data on U.S. crude production published November 30 was also somewhat bearish.

Oil prices steady as Chinese demand counters stronger dollar

Last week, China became the <a href="http://www.cctvplus.com/news/20170518/8050794.shtml#!language=1">first country</a> to stably and continuously produce gas from methane hydrate.

Methane hydrate is one of the world&#39;s largest untapped sources of energy, with reserves <a href="http://www.cctvplus.com/news/20170518/8050794.shtml#!language=1">twice</a> that of coal, oil and natural gas combined. It is usually found under the ocean bed, but because of difficulties involved in recovering it, it has not been exploited so far.

Countries such as China and Japan are increasingly making attempts to tap these reserves in their waters. Could India take a leaf out of their book and make use of this resource?

The motivation for China&nbsp;and Japan

China <a href="http://www.cctvplus.com/news/20170518/8050794.shtml#!language=1">produced</a> at least 10,000 cubic metres of methane for eight days in a row at&nbsp;their mining project in the South China sea. Japan is trying to better this by producing gas for <a href="https://www.ft.com/content/84abdc56-30b0-11e7-9555-23ef563ecf9a">four weeks</a> in a test well off the coast of central Japan.

Japan was actually the first to extract methane with an offshore platform <a href="http://uk.reuters.com/article/japan-methane-hydrate-idUKL3N1HI1KA">back in 2013</a>, but the flow lasted less than a week before problems crept in.

<iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/WCnXp_c9stg" width="560"></iframe>

China is especially motivated to&nbsp;develop&nbsp;this technology because it is the <a href="http://www.reuters.com/article/us-china-economy-trade-crude-idUSKBN1570VJ">second-largest</a> importer of crude oil in the world. Japan is in a similar predicament, as it is presently the world&#39;s <a href="http://uk.reuters.com/article/japan-methane-hydrate-idUKL3N1HI1KA">biggest importer</a> of liquefied natural gas.

Right now extracting methane is not technically viable, let alone being commercially viable. But the progress made by China and Japan shows that day is not far away. In fact, Japan is hoping to produce methane on a commercial scale 10 years from now, <a href="http://uk.reuters.com/article/japan-methane-hydrate-idUKL3N1HI1KA">by 2027</a>.

Why methane hydrate matters for India

Global reserves of gas stored in methane hydrate are <a href="https://www.ft.com/content/8925cbb4-7157-11e3-8f92-00144feabdc0">estimated</a> to be in the range of 3,000 - 140,000 trillion cubic metres. Around 1,900 trillion cubic metres of methane are present in the seas around India, according to one <a href="http://economictimes.indiatimes.com/opinion/columnists/swaminathan-s-a-aiyar/tapping-massive-deposits-of-fire-ice-methane-hydrate-can-change-indias-energy-landscape/articleshow/19014438.cms">report</a>.

<div class="ui-state-default" contenteditable="false"><img alt="" draggable="false" src="http://s.wionews.com/photos/india_reserves-20170523030645.png" />
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There are potential reserves of methane hydrate in these basins (WION)
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In fact, a gas reserve was <a href="http://timesofindia.indiatimes.com/business/india-business/ONGC-hydrates-discovery-may-be-4-times-bigger-than-RILs-gas-find/articleshow/50505577.cms">discovered two years ago</a> in 2015 in the Krishna-Godavari basin off the eastern coast of India. The reserve is said to have a potential four trillion cubic metres of gas and there are said to be <a href="http://dghindia.gov.in/index.php/page?pageId=39">more reserves</a> in the Mahanadi and Andaman basins in the Bay of Bengal.

Given how India could be the world&#39;s third-biggest consumer of energy <a href="http://www.business-standard.com/article/economy-policy/india-to-be-world-s-3rd-largest-energy-user-by-2020-shinde-112042103005_1.html">by 2020</a>, it would do well to meet growing demand by tapping this huge resource just off its shores.

East Asian powers are trying to tap methane hydrate as a potential source of energy. Is India even in the conversation?

Last week, China became the first country to stably and continuously produce gas from methane hydrate. Methane hydrate is one of the world's largest untapped sources of energy, with reserves twice that of coal, oil and natural gas combined. It is usually found under the ocean bed, but because of difficulties involved in recovering it, it has not been exploited so far. Countries such as China and Japan are increasingly making attempts to tap these reserves in their waters. Could India take a leaf out of their book and make use of this resource? The motivation for China and Japan China produced at least 10,000 cubic metres of methane for eight days in a row at their mining project in the South China sea. Japan is trying to better this by producing gas for four weeks in a test well off the coast of central Japan. Japan was actually the first to extract methane with an offshore platform back in 2013, but the flow lasted less than a week before problems crept in. China is especially motivated to develop this technology because it is the second-largest importer of crude oil in the world. Japan is in a similar predicament, as it is presently the world's biggest importer of liquefied natural gas. Right now extracting methane is not technically viable, let alone being commercially viable. But the progress made by China and Japan shows that day is not far away. In fact, Japan is hoping to produce methane on a commercial scale 10 years from now, by 2027. Why methane hydrate matters for India Global reserves of gas stored in methane hydrate are estimated to be in the range of 3,000 - 140,000 trillion cubic metres. Around 1,900 trillion cubic metres of methane are present in the seas around India, according to one report. There are potential reserves of methane hydrate in these basins (WION) × In fact, a gas reserve was discovered two years ago in 2015 in the Krishna-Godavari basin off the eastern coast of India. The reserve is said to have a potential four trillion cubic metres of gas and there are said to be more reserves in the Mahanadi and Andaman basins in the Bay of Bengal. Given how India could be the world's third-biggest consumer of energy by 2020, it would do well to meet growing demand by tapping this huge resource just off its shores.

China, Japan way ahead of India in new gas race

The ransomware attack over the weekend was swift,&nbsp;<a href="http://www.wionews.com/world/global-cyberattack-has-hit-200000-victims-so-far-europol-15575">affecting&nbsp;200,000 computers</a> around the world in more than 150 countries. But a report by the computer security firm Symantec tells us that something we should have been expecting this attack.

According to the <a href="https://www.symantec.com/content/dam/symantec/docs/reports/istr-22-2017-en.pdf">Internet Security Threat Report</a>&nbsp;released just two months ago in April 2017, there were 1,271 ransomware attacks detected a day in 2016, a 36% rise from 2015.

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Different variants of the same ransomware are grouped together as a &#39;family&#39;, and this security report says that there were more than a hundred new ransomware families discovered in 2016.

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If we look at the average ransom demanded by these new families, it rose to around $1,077 in 2016. By contrast, the WannaCry ransomware which was behind the weekend attack, asks for <a href="http://www.wionews.com/world/global-cyberattack-has-hit-200000-victims-so-far-europol-15575">around $300</a>.

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And there has been no country left untouched by ransomware attacks in 2016, with the United States bearing the brunt of it with 36%.

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The ransomware threat has been growing over the years, as these charts show.

The ransomware attack over the weekend was swift, affecting 200,000 computers around the world in more than 150 countries. But a report by the computer security firm Symantec tells us that something we should have been expecting this attack. According to the Internet Security Threat Report released just two months ago in April 2017, there were 1,271 ransomware attacks detected a day in 2016, a 36% rise from 2015. Different variants of the same ransomware are grouped together as a 'family', and this security report says that there were more than a hundred new ransomware families discovered in 2016. If we look at the average ransom demanded by these new families, it rose to around $1,077 in 2016. By contrast, the WannaCry ransomware which was behind the weekend attack, asks for around $300. And there has been no country left untouched by ransomware attacks in 2016, with the United States bearing the brunt of it with 36%.

Infographic: How big a problem is ransomware?

Nepal&#39;s new Maoist Prime Minister Prachanda named a minority leader to the key position of home minister in his first appointments on Thursday, seeking reconciliation after months of protests by southern plainsfolk over a new constitution. 
 
Prachanda,whose real name is Pushpa Kamal Dahal, still uses his wartime pseudonym, which means &quot;fierce&quot;. He has promised to keep his cabinet small, after predecessor K P Oli was criticised for appointing a 32-member coalition with six deputy prime ministers. 
 
After the oath-taking ceremony in capital Kathmandu, Prachanda administered the oath of office to five ministers, including three from his political party and two from the Nepali Congress. 
 
The sixty-one-year-old former rebel commander has vowed to tackle the grievances of the Madhesi minority that demands a greater say in central government by amending the constitution adopted last September. 
 
The Madhesis, who have close cultural and family ties with neighbouring India, have staged protests against the charter, saying it marginalised them by dividing their southern homeland into several states. 
 
Violence, blamed by many Madhesis on the use of excessive police force, claimed more than 50 lives in protests that petered out in February. 
 
Prachanda appointed Bimalendra Nidhi of the centrist Nepali Congress, the biggest coalition party, as deputy prime minister in charge of the home ministry, officials said. 
 
Among those appointed to the cabinet was Krishna Bahadur Mahara from Prachanda&#39;s Maoist party, who will also be a deputy prime minister in charge of the finance ministry. 
 
(Reuters)

He has vowed to tackle the grievances of the Madhesis who demand a greater say in central government?

Nepal's new Maoist Prime Minister Prachanda named a minority leader to the key position of home minister in his first appointments on Thursday, seeking reconciliation after months of protests by southern plainsfolk over a new constitution. Prachanda,whose real name is Pushpa Kamal Dahal, still uses his wartime pseudonym, which means "fierce". He has promised to keep his cabinet small, after predecessor K P Oli was criticised for appointing a 32-member coalition with six deputy prime ministers. After the oath-taking ceremony in capital Kathmandu, Prachanda administered the oath of office to five ministers, including three from his political party and two from the Nepali Congress. The sixty-one-year-old former rebel commander has vowed to tackle the grievances of the Madhesi minority that demands a greater say in central government by amending the constitution adopted last September. The Madhesis, who have close cultural and family ties with neighbouring India, have staged protests against the charter, saying it marginalised them by dividing their southern homeland into several states. Violence, blamed by many Madhesis on the use of excessive police force, claimed more than 50 lives in protests that petered out in February. Prachanda appointed Bimalendra Nidhi of the centrist Nepali Congress, the biggest coalition party, as deputy prime minister in charge of the home ministry, officials said. Among those appointed to the cabinet was Krishna Bahadur Mahara from Prachanda's Maoist party, who will also be a deputy prime minister in charge of the finance ministry. (Reuters)

Nepal's new Prime Minister names core team, seeks reconciliation

Traders in the liquefied petroleum gas (LPG) market face a &quot;career-ruining&quot; glut that has led to millions of dollars in losses as Chinese buyers, far from coming to the rescue, are in a stand-off with oil companies to cancel deals. 
 
LPG, a historically niche and dislocated market, has ballooned with the advent of US exports due to the shale boom. The United States went from an importer to the largest single exporter of propane in just a few years, rivalling the West Asia Gulf producers. 
 
&quot;I can&#39;t remember it being this bad. There was massive new production out of the US and people hoped the Chinese market might absorb it,&quot; one LPG trader said. 
 
&quot;There was strong buying in the first four months of the year with low oil prices but that stopped and the market is now a few million tonnes long.&quot; 
 
Traders scrambling to mitigate losses&nbsp; 
 
A glut was expected, but its severity caught most by surprise and will likely serve as a warning to those trading liquefied natural gas, which is increasingly oversupplied. 
 
LPG is the collective term for propane and butane. The United States exports mostly propane used for heating and in the petrochemical industry to make propylene, a base for plastics manufacturing. 
 
Traders have been left scrambling to mitigate losses as China has failed to be the driver of demand. 
 
At least five companies- Vitol, Gunvor, Shell, BP and EDF Trading cancelled July-loading cargoes out of the two major Texas LPG terminals, preferring to pay penalties of up to $1 million per cargo. 
 
Many LPG traders signed up for multi-year contracts but premiums to the US benchmark on a spot basis sunk by about $40 a tonne this year, undercutting the term lifters. 
 
The contracts were also signed when the US benchmark was around a $150 to $200-per-tonne discount to the European benchmark and Saudi Arabia&#39;s official selling price. But spreads shrunk dramatically in 2016, making US exports suddenly unappealing to Asia. 
 
Chinese end-users are now cancelling or renegotiating their term contracts, taking advantage of product overhangs in the Middle East and a cheaper alternative feedstock, naphtha. 
 
Asian demand slowed earlier this year on weak propylene margins, which led to run cuts and delayed new plant start-ups. After hitting a trough, the market is expected to rebalance by the year-end though supply will continue to outpace demand. 
 
&quot;Non-associated gas output means there will be a steady rise in natural gas liquids output despite the oil price doldrums. This trend will continue in the medium term,&quot; Al Troner, head of Asia Pacific Energy Consulting in Houston, said. 
 
Showdown in Court 
 
The disputes have, in some cases, devolved into open altercations and tanker stand-offs. 
 
At an LPG conference earlier this year in China, one trader said he saw &quot;serious arguments between the Chinese and the US suppliers outside the hall at the caf? ... Everyone pretended not to be eavesdropping but stopped chatting and just stood still&quot;. 
 
Targa Resources, operator of an export terminal in Texas, has been stung by contracts with Chinese buyers and is seeking &quot;damages in excess of $1,000,000&quot; from China Soft Packaging Group, documents filed by Targa at a Texas county court showed. 
 
China Soft Packaging declined to comment and Targa did not respond to requests for comment. 
 
&quot;The US suppliers already made fat margins earlier (in 2015) and they should be ready for price negotiations,&quot; a senior source with one of the east China-based LPG buyers said. 
 
Hong Kong-based Oriental Energy International Trading has also had disputes with Targa and Greek LPG trader Naftomar. Targa let Oriental&#39;s Kikyo tanker languish for weeks offshore Texas in June. Naftomar&#39;s Constellation ship is now stuck outside China&#39;s Ningbo port, a senior trader at Naftomar said. 
 
Singapore-based SK Chemical Trading recently cancelled contracts with Naftomar, Petredec and Shell after its end-user Zhejiang Shaoxing Sanyuan Petrochemical Co reneged on its orders. The companies did not respond to requests for comment. 
 
One trader said the price rout was ruining careers and had &quot;gunfight at the O.K. Corral-type implications&quot;, referring to one of the most famous shootouts from the days of the American Wild West. 
 
(Reuters)

A glut was expected but its severity caught most by surprise and will likely serve as a warning to those trading liquefied natural gas

Traders in the liquefied petroleum gas (LPG) market face a "career-ruining" glut that has led to millions of dollars in losses as Chinese buyers, far from coming to the rescue, are in a stand-off with oil companies to cancel deals. LPG, a historically niche and dislocated market, has ballooned with the advent of US exports due to the shale boom. The United States went from an importer to the largest single exporter of propane in just a few years, rivalling the West Asia Gulf producers. "I can't remember it being this bad. There was massive new production out of the US and people hoped the Chinese market might absorb it," one LPG trader said. "There was strong buying in the first four months of the year with low oil prices but that stopped and the market is now a few million tonnes long." Traders scrambling to mitigate losses A glut was expected, but its severity caught most by surprise and will likely serve as a warning to those trading liquefied natural gas, which is increasingly oversupplied. LPG is the collective term for propane and butane. The United States exports mostly propane used for heating and in the petrochemical industry to make propylene, a base for plastics manufacturing. Traders have been left scrambling to mitigate losses as China has failed to be the driver of demand. At least five companies- Vitol, Gunvor, Shell, BP and EDF Trading cancelled July-loading cargoes out of the two major Texas LPG terminals, preferring to pay penalties of up to $1 million per cargo. Many LPG traders signed up for multi-year contracts but premiums to the US benchmark on a spot basis sunk by about $40 a tonne this year, undercutting the term lifters. The contracts were also signed when the US benchmark was around a $150 to $200-per-tonne discount to the European benchmark and Saudi Arabia's official selling price. But spreads shrunk dramatically in 2016, making US exports suddenly unappealing to Asia. Chinese end-users are now cancelling or renegotiating their term contracts, taking advantage of product overhangs in the Middle East and a cheaper alternative feedstock, naphtha. Asian demand slowed earlier this year on weak propylene margins, which led to run cuts and delayed new plant start-ups. After hitting a trough, the market is expected to rebalance by the year-end though supply will continue to outpace demand. "Non-associated gas output means there will be a steady rise in natural gas liquids output despite the oil price doldrums. This trend will continue in the medium term," Al Troner, head of Asia Pacific Energy Consulting in Houston, said. Showdown in Court The disputes have, in some cases, devolved into open altercations and tanker stand-offs. At an LPG conference earlier this year in China, one trader said he saw "serious arguments between the Chinese and the US suppliers outside the hall at the caf? ... Everyone pretended not to be eavesdropping but stopped chatting and just stood still". Targa Resources, operator of an export terminal in Texas, has been stung by contracts with Chinese buyers and is seeking "damages in excess of $1,000,000" from China Soft Packaging Group, documents filed by Targa at a Texas county court showed. China Soft Packaging declined to comment and Targa did not respond to requests for comment. "The US suppliers already made fat margins earlier (in 2015) and they should be ready for price negotiations," a senior source with one of the east China-based LPG buyers said. Hong Kong-based Oriental Energy International Trading has also had disputes with Targa and Greek LPG trader Naftomar. Targa let Oriental's Kikyo tanker languish for weeks offshore Texas in June. Naftomar's Constellation ship is now stuck outside China's Ningbo port, a senior trader at Naftomar said. Singapore-based SK Chemical Trading recently cancelled contracts with Naftomar, Petredec and Shell after its end-user Zhejiang Shaoxing Sanyuan Petrochemical Co reneged on its orders. The companies did not respond to requests for comment. One trader said the price rout was ruining careers and had "gunfight at the O.K. Corral-type implications", referring to one of the most famous shootouts from the days of the American Wild West. (Reuters)

Oil traders lose millions as LPG glut shocks market

After half a year of strong oil price rises, Asian crude demand is slowing and by some measures falling, and many market participants suspect it is not just a cyclical phenomenon, but also a product of more permanent structural changes.

With years of annual economic growth of 7-10 per cent in China and similar recent figures from India, Asia-Pacific has overtaken the Americas to become the world&#39;s biggest oil consuming region, accounting for almost 40 per cent of global demand.

But an industry that has come to rely on Asia&#39;s booming thirst for oil could soon be scratching around for growth.

Thomson Reuters Eikon data shows that Asian crude oil tanker imports have fallen, albeit from record levels, for four straight months and by 12 per cent since March to around 82 million tonnes (20 million barrels per day), slightly below last year&#39;s levels.

Much of the surprise decline is explained by conditions in China, the region&#39;s biggest consumer, accounting for 27 per cent of Asia-Pacific demand and 13 per cent of global demand.

With its long-term growth outlook now camped perhaps permanently below 7 per&nbsp;cent, most analysts expect vehicle sales in China will slow accordingly.

They have already slipped to 2.1 million at the end of May, down from a peak of almost 2.8 million in December 2015.

Refiners across Asia said that was starting to hit their business.

&quot;Asian oil demand growth is slowing down. China, Asia&#39;s largest market, is experiencing sluggish demand,&quot; said a South Korean refiner.

As domestic refiners sell off surplus fuel, China&#39;s exports of diesel and gasoline, the main refined fuels for industrial and passenger vehicles, have both soared.

&quot;Asia refiners have already started to pull back ... and there are reports of (oil) cargoes struggling to sell,&quot; said Adam Longson of Morgan Stanley this week in a note to clients, adding that demand in the third quarter could fall further.

Ship brokers say traders have started chartering supertankers to store supplies that consumers can&#39;t absorb.

One key pillar of recent demand is never coming back. Analysts think China has nearly finished building its strategic petroleum reserves (SPR).

Oil analysts at JPMorgan estimated in a note to clients last week that the SPR was now at 400 million barrels, which they believed was close to capacity.

&quot;Our model suggests a 15 per cent month-on-month decline in China&#39;s crude oil net imports in September, or a loss of 1.2 million barrels versus August and 0.8 million barrels less from the 12-month average,&quot; they said. 
&nbsp;

EFFICIENCY SAVINGS

Structural changes in demand are not limited to China.

For Asia&#39;s most developed oil markets, Japan and South Korea, analysts say long-term demand will steadily fall.

Japan&#39;s oil consumption, once 6 million barrels per day (bpd) and 10 per cent of global demand, has fallen to not much more than 3.5 million bpd, or under 5 per cent of world consumption. It will fall further as government consolidates its refiners.

&quot;There are various factors. Nuclear power generation has restarted, pushing down energy demand. When nuclear plants shut down (after the 2011 Fukushima disaster), Japan imported lots of crude. Other factors include shrinking population, saturated status of automobiles and efficiency improvement,&quot; said Kaname Gokon, strategist at brokerage Okato Shoji.

The situation is similar in South Korea.

&quot;Korea&#39;s oil demand is at a standstill, and demand is expected to decrease because of greenhouse gas emissions policy and alternative fuel. On top of that, if a growing number of people switch to use electric cars, oil demand is bound to fall,&quot; said Moon Young-seok, senior researcher at state-run Korea Energy Economics Institute.

Even in India, the industry&#39;s big hope to compensate for slower demand in China, demand for new cars is tepid.

While Indian motorbike sales remain strong, the number of new cars sold has fallen below 215,000 per month, down from almost 260,000 in October and well below the monthly record of just over 300,000 more than four years ago.

While industry doesn&#39;t expect Asian oil demand to decline outright, they say the growth seen over the past decade may never be revisited.

The fuel economy standards of new cars, which stagnated below 30 miles per gallon (mpg) between 1980 and 2010, have improved to around 40 mpg now and are expected to rise to mid-50 mpg by the early 2020s, according to industry estimates. That&#39;s without considering the rise of hybrid or pure electric vehicles.

&quot;Energy efficiency will play a huge role in slowing the growth in global demand, as energy use per unit of economic output is likely to fall by 40 per cent (between 2014 and 2040),&quot; US oil giant ExxonMobil says in its 2016 outlook. 
 
(Reuters)

The slowing Asian demand for crude is not just a cyclical phenomenon, but the product of more permanent structural changes

After half a year of strong oil price rises, Asian crude demand is slowing and by some measures falling, and many market participants suspect it is not just a cyclical phenomenon, but also a product of more permanent structural changes. With years of annual economic growth of 7-10 per cent in China and similar recent figures from India, Asia-Pacific has overtaken the Americas to become the world's biggest oil consuming region, accounting for almost 40 per cent of global demand. But an industry that has come to rely on Asia's booming thirst for oil could soon be scratching around for growth. Thomson Reuters Eikon data shows that Asian crude oil tanker imports have fallen, albeit from record levels, for four straight months and by 12 per cent since March to around 82 million tonnes (20 million barrels per day), slightly below last year's levels. Much of the surprise decline is explained by conditions in China, the region's biggest consumer, accounting for 27 per cent of Asia-Pacific demand and 13 per cent of global demand. With its long-term growth outlook now camped perhaps permanently below 7 per cent, most analysts expect vehicle sales in China will slow accordingly. They have already slipped to 2.1 million at the end of May, down from a peak of almost 2.8 million in December 2015. Refiners across Asia said that was starting to hit their business. "Asian oil demand growth is slowing down. China, Asia's largest market, is experiencing sluggish demand," said a South Korean refiner. As domestic refiners sell off surplus fuel, China's exports of diesel and gasoline, the main refined fuels for industrial and passenger vehicles, have both soared. "Asia refiners have already started to pull back ... and there are reports of (oil) cargoes struggling to sell," said Adam Longson of Morgan Stanley this week in a note to clients, adding that demand in the third quarter could fall further. Ship brokers say traders have started chartering supertankers to store supplies that consumers can't absorb. One key pillar of recent demand is never coming back. Analysts think China has nearly finished building its strategic petroleum reserves (SPR). Oil analysts at JPMorgan estimated in a note to clients last week that the SPR was now at 400 million barrels, which they believed was close to capacity. "Our model suggests a 15 per cent month-on-month decline in China's crude oil net imports in September, or a loss of 1.2 million barrels versus August and 0.8 million barrels less from the 12-month average," they said. EFFICIENCY SAVINGS Structural changes in demand are not limited to China. For Asia's most developed oil markets, Japan and South Korea, analysts say long-term demand will steadily fall. Japan's oil consumption, once 6 million barrels per day (bpd) and 10 per cent of global demand, has fallen to not much more than 3.5 million bpd, or under 5 per cent of world consumption. It will fall further as government consolidates its refiners. "There are various factors. Nuclear power generation has restarted, pushing down energy demand. When nuclear plants shut down (after the 2011 Fukushima disaster), Japan imported lots of crude. Other factors include shrinking population, saturated status of automobiles and efficiency improvement," said Kaname Gokon, strategist at brokerage Okato Shoji. The situation is similar in South Korea. "Korea's oil demand is at a standstill, and demand is expected to decrease because of greenhouse gas emissions policy and alternative fuel. On top of that, if a growing number of people switch to use electric cars, oil demand is bound to fall," said Moon Young-seok, senior researcher at state-run Korea Energy Economics Institute. Even in India, the industry's big hope to compensate for slower demand in China, demand for new cars is tepid. While Indian motorbike sales remain strong, the number of new cars sold has fallen below 215,000 per month, down from almost 260,000 in October and well below the monthly record of just over 300,000 more than four years ago. While industry doesn't expect Asian oil demand to decline outright, they say the growth seen over the past decade may never be revisited. The fuel economy standards of new cars, which stagnated below 30 miles per gallon (mpg) between 1980 and 2010, have improved to around 40 mpg now and are expected to rise to mid-50 mpg by the early 2020s, according to industry estimates. That's without considering the rise of hybrid or pure electric vehicles. "Energy efficiency will play a huge role in slowing the growth in global demand, as energy use per unit of economic output is likely to fall by 40 per cent (between 2014 and 2040)," US oil giant ExxonMobil says in its 2016 outlook. (Reuters)

Oil industry losing burn of Asian demand

The oil market is now in balance thanks to unplanned outages and robust demand, particularly from emerging economies, but this equilibrium will tilt into surplus again early next year, the International Energy Agency (IEA) said today. 
 
The agency said in its monthly report that demand growth in 2017 is likely to reach 1.3 million barrels per day (bpd), the same level at which it estimates growth for this year, having revised up its May 2016 forecast of 1.2 million bpd. 
 
&quot;Again, on the planning assumption that OPEC oil production grows modestly in 2017, we expect to see global oil stocks build slightly in the first half of 2017 before falling slightly more in the second half of 2017. For the year as a whole, there will be a very small stock draw of 0.1 million bpd,&quot; &nbsp; said&nbsp;the IEA. 
 
&quot;At halfway in 2016, the oil market looks to be balancing; but we must not forget that there are large volumes of shut-in production, mainly in Nigeria and Libya, that could return to the market, and the strong start for oil demand growth seen this year might not be maintained,&quot; said&nbsp;the Paris-based agency . 
 
Most of the anticipated demand growth this year and in 2017 is expected to come from nations that are not part of the Organisation for Economic Cooperation and Development (OECD), the agency said. 
 
&quot;We must stress that this is our first look at 2017 and the huge number of moving parts will see us amend our numbers accordingly. However ... the direction of travel seems to be clear,&quot; said&nbsp;the IEA. 
 
The IEA&#39;s latest demand estimate for the first three months of this year shows global oil deliveries rising by 1.6 million bpd to 95.2 million bpd, with nine out of every 10 extra barrels going to a non-OECD economy. 
 
On the supply side, the IEA said output fell by 590,000 bpd year-on-year to 95.4 million bpd in May, the first major decline since the start of 2013, as spending cuts and outages reduced non-OPEC production by 1.3 million bpd from a year earlier. 
 
Having fallen by 900,000 bpd in 2016, non-OPEC supply growth is expected to rise by 200,000 bpd in 2017, lifting output to 57 million bpd, the IEA said. 
 
Crude output from the Organization of the Petroleum Exporting Countries fell by 100,000 bpd in May to 32.61 million bpd, after a spate of attacks on oil infrastructure in Nigeria offset higher output from the Middle East. Production was still 500,000 bpd higher than in May last year. 
 
&quot;Iran has clearly emerged as OPEC&#39;s fastest source of supply growth this year, with an anticipated annual gain of nearly 700,000 bpd,&quot; the IEA said. 
 
The only other substantial increase from OPEC in 2017 could be from Nigeria, should security issues in the Niger Delta be resolved. 
(Reuters)

Large volumes of shut-in production from Nigeria and Libya can return to the market and that may change oil demand growth

The oil market is now in balance thanks to unplanned outages and robust demand, particularly from emerging economies, but this equilibrium will tilt into surplus again early next year, the International Energy Agency (IEA) said today. The agency said in its monthly report that demand growth in 2017 is likely to reach 1.3 million barrels per day (bpd), the same level at which it estimates growth for this year, having revised up its May 2016 forecast of 1.2 million bpd. "Again, on the planning assumption that OPEC oil production grows modestly in 2017, we expect to see global oil stocks build slightly in the first half of 2017 before falling slightly more in the second half of 2017. For the year as a whole, there will be a very small stock draw of 0.1 million bpd," said the IEA. "At halfway in 2016, the oil market looks to be balancing; but we must not forget that there are large volumes of shut-in production, mainly in Nigeria and Libya, that could return to the market, and the strong start for oil demand growth seen this year might not be maintained," said the Paris-based agency . Most of the anticipated demand growth this year and in 2017 is expected to come from nations that are not part of the Organisation for Economic Cooperation and Development (OECD), the agency said. "We must stress that this is our first look at 2017 and the huge number of moving parts will see us amend our numbers accordingly. However ... the direction of travel seems to be clear," said the IEA. The IEA's latest demand estimate for the first three months of this year shows global oil deliveries rising by 1.6 million bpd to 95.2 million bpd, with nine out of every 10 extra barrels going to a non-OECD economy. On the supply side, the IEA said output fell by 590,000 bpd year-on-year to 95.4 million bpd in May, the first major decline since the start of 2013, as spending cuts and outages reduced non-OPEC production by 1.3 million bpd from a year earlier. Having fallen by 900,000 bpd in 2016, non-OPEC supply growth is expected to rise by 200,000 bpd in 2017, lifting output to 57 million bpd, the IEA said. Crude output from the Organization of the Petroleum Exporting Countries fell by 100,000 bpd in May to 32.61 million bpd, after a spate of attacks on oil infrastructure in Nigeria offset higher output from the Middle East. Production was still 500,000 bpd higher than in May last year. "Iran has clearly emerged as OPEC's fastest source of supply growth this year, with an anticipated annual gain of nearly 700,000 bpd," the IEA said. The only other substantial increase from OPEC in 2017 could be from Nigeria, should security issues in the Niger Delta be resolved. (Reuters)

IEA sees oil market balance in 2016, surplus to re-emerge next year

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