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OIL AND GAS
Benteck says gas demand could drive prices higher
by Daniel J. Graeber
Washington (UPI) Aug 27, 2014


Chinese economy slowing, oil demand declines
Singapore (UPI) Aug 27, 2014 - The decline in how much oil China needs is a reflection of a slowdown in its economy, analysis from Platts said Wednesday.

Apparent oil demand, a reflection of how much oil goes into domestic refineries combined with net oil product imports, decreased 2.1 percent in July year-on-year. From June, apparent oil demand dropped 6.2 percent to 9.61 million barrels per day.

"The weakness in China's oil demand reflects the ongoing slowdown in its economy," James Bourne, Platts associate editorial director for Asia news, said in an emailed statement.

That's in contrast to the Organization of Petroleum Exporting Countries, which said in its latest monthly oil market report Chinese oil demand should increase another 3.8 percent during the fourth quarter of the year.

Asian economies are growing at a faster rate than other major markets. OPEC said in a 97-page annual report published earlier this year that oil demand should increase most notably in China, Thailand and Indonesia.

OPEC said commercial oil inventories in China fell by 4.9 million barrels in June because of an 8 percent decline in imports and 1.4 percent decline in domestic oil production.

Emerging and recovering demand for natural gas in North American could translate to an end to the era of cheap energy resources, a forecast shows.

Bentek Energy, a forecasting unit of energy reporting group Platts, said non-traditional and recovering sources of gas demand could pass the 5 million cubic feet per day mark by 2019.

These new sources of demand, from new export facilities for liquefied natural gas to more gas-fired power plants, could be a driver in a future North American shale market.

Rocco Canonica, lead author of a 50-page report on demand, said the trends show an era where cheap energy reserves sourced from shale basins in North America may be drawing to a close.

"If demand growth reaches its full potential, we could expect a tighter U.S. market and upward price pressure," he said in a statement Wednesday.

The American Petroleum Institute, which represents the interests of the energy sector, said the U.S. economy would be better off with more natural gas production, particularly if producers could tap into export markets.

A 2012 report from NERA Economic Consulting said there would be "net economic benefits" from exports.

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