• Global oil supply rose by 2.5 mb/d to 90 mb/d in July after Saudi Arabia ended its voluntary 1 mb/d cut, the UAE exceeded its OPEC+ target and US production started to recover. While OPEC+ cuts ease by nearly 2 mb/d this month and other producers restore shut-in volume, compensation for earlier OPEC+ over-production could keep world supply steady in August. Global supply looks set to fall by 7.1 mb/d in 2020 and rise by 1.6 mb/d next year.
  • Global oil demand is expected to be 91.9 mb/d in 2020, down 8.1 mb/d y-o-y. In this Report, we reduce our 2020 forecast by 140 kb/d, the first downgrade in several months, reflecting the stalling of mobility as the number of Covid-19 cases remains high, and weakness in the aviation sector. China’s oil demand is recovering strongly, up 750 kb/d y-o-y in June. We have revised down our 2021 global demand estimate by 240 kb/d to 97.1 mb/d, mainly due to aviation sector weakness.
  • Global refinery intake is recovering, but the pace will lag behind the demand rebound as product inventory levels are very high. In July, crude runs are estimated at 3.7 mb/d above the low point in May, with another 5.6 mb/d ramp-up expected by end-2020. In 2020, runs will decline by 6.9 mb/d but in 2021 they will rebound by only 4.5 mb/d. Runs in 2021 will be 2.7 mbd below the historical peak seen in 2018.
  • OECD industry stocks rose by 16.2 mb (0.54 mb/d) to 3 235 mb in June, and in the first half of 2020 they increased at an average rate of 1.78 mb/d. In the US, preliminary data for July show that commercial crude stocks fell by 18.2 mb. In Europe, they rose by 3.6 mb while falling in Japan by 1.6 mb. As the market rebalances and the forward price curve flattens, floating storage of crude oil fell by 35.7 mb from its all-time high in June, to 184.8 mb in July.
  • Crude prices remained in a narrow ~$3.0/bbl range in July, averaging $40.77/bbl for NYMEX WTI and $43.22/bbl for ICE Brent. The forward price curve contango deepened again in July after flattening in June, as forward prices (anticipating a tighter market) rose faster than prompt prices. Middle distillate and naphtha cracks made modest gains. Freight rates fell to levels not seen in months or even years.