OREANDA-NEWS.  September 24, 2014. Crude has been facing pressures with global supplies rising. The prices have fallen around 15 percent this year. Discussing the current trend and outlook, Miswin Mahesh, Energy Analyst at Barclays, said the Indian oil demand is poised to grow faster than Chinese demand this year, which is going to become a significant market changer for balances.

According to him, the Indian oil demand has been sustaining strong growth rates on the back of gasoline demand. Even the diesel price deregulation will “sort of help refineries as well, given that they can get more of their under-recoveries before the quarter ends”. 
Below is the transcript of Miswin Mahesh's interview with Reema Tendulkar and Sumaira Abidi on CNBC-TV18.

Sumaira: We have seen nearly a 15 percent fall in crude this year. Till when do you expect this correction to continue and what would be your outlook on the prices?

A: In terms of why prices have fallen, it is to do with two things. There have been a lot of concerns recently on how oil demand growth globally has faded away over the last quarters. And then on top of that, we have also had a lot of supplies coming to the market and that is why we have had WTI fall close to USD 85 per barrel level, brent as well fall close to USD 90 per barrel.

In terms of how low we can go from here, it looks very different from how we had sort of seen prices fall over 2009-2010 time series so as to say and that was when OPEC was much more in control of the market. Southeast who normally balance the market in terms of production and in terms of keeping an eye on prices although much active at that period this time around they are a bit more passive. So I think we will see a bit more of a weakness come into the market especially since the supplies are not being bounced away.

Sumaira: What are the factors which you attribute for this fall in crude? Is it an increase in supply on the looming global slowdown fears?

A: Yes, so a couple of things - in terms of supplies, we have seen a lot of crude oil come back from Libya and that was a surprise for the markets given how politically Libya is now almost two different countries, several rebels fighting over different aspects of the country. So the big surprise was from Libya -- which was average producing almost nothing just two months ago and has been producing close to 800,000 barrels per day now.

On top of that a lot more of the US oil production is having its side effects being felt in the Atlantic basin of the market. Lot of South African crude oil has been accumulating and that is being weighing on the supply side as well. Added to that, as you mentioned the demand side you have Chinese oil demand that is growing at the slowest pace in 24 years and that just means that Asian demand in general has been fairly weak as well.

Reema: What about Indian markets, what kind of an impact are you seeing here led by falling crude prices and what would your outlook be?

A: It has been interesting for the Indian oil market this year because Indian oil demand is now poised to grow faster than Chinese oil demand this year and that is a significant market changer and in terms of how the Indian rupee is relative to other emerging market currencies and the prospects for it and linking that with oil prices, overall Indian oil demand is still sustaining very strong growth rates especially from gasoline demand and now with the price deregulation for diesel that sort of helps refineries as well given that they can get more of their under-recoveries before the quarter ends.

Reema: International coal prices have been heading southwards, can they head lower from here or is this the bottom?

A: Coal prices is to do with how Chinese demand this year has been fairly soft in terms of their imports, in terms of how their economy is geared as well at the moment. The government is focusing a lot more on cleaner sources of energy and that is partly to do with the reason why coal has been substituted away from the power sector and they are using a lot of gas substituting away with gas as well as hydro. This year China has had significant amounts of hydro, a very healthy level and that has helped the power sector become a lot more efficient this time. That has had an effect on oil as well because a lot of diesel consumption used to be linked with the way Chinese power sector with the inefficiency so as to say in the Chinese power sector because diesel generators etc were used a lot and now that is not being required at all. So in terms of coal usage picking up, I would say we still need to see a bit more of a stronger recovery in China without government stimuli. So it should be more of a no organic growth.