The drop in demand for OPEC crude means there will be less strain on other producers in making up for supply losses in Venezuela and Libya, and potentially in Iran as renewed US sanctions kick in. Increased production in Kuwait, Nigeria and the United Arab Emirates more than offset the drop elsewhere.
Yet their shipped imports in July were about half a million barrels per day (bpd) below their Jaunary-June average of 12.4 million bpd, shipping data shows. "That, combined with the OPEC report confirming that the Saudis reined back output in July after opening the spigots in June, appears to have alleviated the downward pressure on crude", said Vandana Hari, founder of Vanda Insights, in a note Tuesday.
"Looking ahead, healthy global economic developments and increased industrial activity should support the demand for distillate fuels in the coming months, leading to a further drawdown in diesel inventories, which already stand well below the five-year average in the OECD region", the report stated.
Global demand growth for 2018 was forecast at 1.64 million barrels a day, down by 10,000 from the prior month's estimate. This was attributed to a weaker-than-expected demand in Latin America and the Middle East during the second quarter of the year.
June's OPEC meeting ended with a commitment for just under 1 million b/d of increased output, supported by Saudi Arabia and Russian Federation.
This means compliance with the original supply-cutting deal has slipped to 126 percent, according to a Reuters calculation, meaning members are still cutting more than promised.
"If you look at pure economic figures, the impact of the tariff disputes is still quite small, perhaps 0.5 percent of GDP growth".
"This week, we saw the IEA [International Energy Agency] maintain its projections for global oil demand in 2018, while OPEC made a minor downward revision". Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.