Mr. John McCarthy:

China is moving in the wrong direction. It is very oil intensive in terms of production, as are other emerging market economies. World growth is slowing, so there are demand side-effects. There are also supply side-effects, there has been a new supply from non-conventional sources and there is also an element of some of the oil cartels boosting supply in order to disincentivise investment in shale, to kill that sector off. They are playing the long game. I think supply is a factor as well.

I would not attach a very strong probability to an increase in oil prices. One could not rule it out. Some people have suggested that if China continues to move in the wrong direction, oil prices could fall a bit, which is the reason I put in an upside risk as a further decline in oil prices. Goldman Sachs had a report stating that oil prices could be $20 per barrel in the short term. It is not the baseline scenario but one could not rule it out at the same time.