Sluggish China to keep oil prices low

Global oil prices are unlikely to increase in this year’s fourth quarter, due in part to the impact of China’s sluggish economy on its oil imports, says an analyst at national oil and gas conglomerate PTT Plc.
With no increase in prices, even in the winter when they usually rise as the result of higher energy demand to deal with colder climes, Thailand’s Oil Fuel Fund should face less pressure to subsidise domestic oil and gas prices, said an energy official who requested anonymity.
Lower oil prices enable officials to collect more levies from oil consumers, he said.
According to benchmark crude oil prices — ICE Brent and West Texas Intermediate (WTI) — global oil prices fell by US$6 per barrel in September, down from $73 per barrel (ICE Brent) and $69 per barrel (WTI), said PTT Prism analyst Asawin Panterdthai.
PTT Prism is a unit under PTT comprised of experts across PTT’s energy businesses.
The lower-than-expected growth of the Chinese economy, which is the world’s largest crude oil importer, is among the key factors slowing down the increase in global oil prices, said Mr Asawin, citing a projection made by PTT Global Chemical, the petrochemical arm of PTT.
Chinese economic growth stood at 4.7% in the third quarter, which was lower than the whole-year estimate of 5% on average, he said.
The country’s economic downturn resulted mainly from the impact of problems in the property sector.
Another factor that could affect global oil prices is the policy of a new US administration, which is believed to be likely to prevent a surge in prices, said Mr Asawin.
The US presidential election is scheduled to be held on Nov 5.
Though America is a major oil producer, it also needs to import a significant amount of oil to serve its large economy.
The US Federal Reserve is expected to make further cuts in interest rates this year to fuel the US economy, eventually resulting in higher US demand for oil in the winter, said Mr Asawin.
It is expected that temperatures in the US will be lower than usual in the winter this year due to the impact of La Niña, also known as ocean cooling.
On the side of global crude oil supply, the oil cartel Opec and its allies agreed in June to maintain an oil production cut of 1.65 million barrels per day until the end of 2025.
The cut was previously set to expire at the end of 2024.