Oil, Traders & China Mr. Mohsen Ziya

China Economy Outlook Following strong 2Q GDP, China has entered Q3 on a softer note, albeit temporarily Economy growing at moderate but steady pace Government focus remains on corporate deleveraging with improved balance sheet

China Economy Outlook China will hold its stance on North Korea & market reactions have been limited Manufacturing PMI has remained steady whilst electricity consumption has surged China’s foreign currency reserves have increased to $3,081 tr for the 1st 7 months

WTI, Brent & Shale Trading remains range bound; WTI year end target $50+/bl & $55/bl in 2018 Wider Brent with larger 3 month future & cash price difference International Energy Agency (IEA) & US Energy Information Administration (EIA) are bullish on increased WTI prices Separately, China’s import continues to increase whilst world production is contracting

WTI, Brent & Shale WTI prices is in contango where future price is trading above cash contracts. This will reverse over time and is due to US refinery disruptions caused by weather disruptions Higher cost of financing will increase breakeven costs for shale producers thus keeping WTI above USD 50/bl

Traders Challenges Consumers and larger trades can ride the price fluctuations Mid to small traders face significant challenges by higher cost of capital, market volatility, geopolitical impacts on transportation and supply availability Any small market correction will have significant impact on mid distillers and physical traders profitability