- Global oil supply rose by 1.1 mb/d in August to 91.7 mb/d as OPEC+ cuts eased, but was down
9.3 mb/d on a year ago. Following two months of gains, the recovery in countries outside the
OPEC+ deal stalled in August. Production in the United States fell by 0.4 mb/d as Hurricane Laura
forced precautionary shut-ins. Total non-OPEC supply is expected to drop by 2.6 mb/d in 2020,
before posting a modest 0.5 mb/d recovery next year.
- A resurgence of Covid-19 cases in many countries, local lockdown measures, continued teleworking
and the weak aviation sector led to downward revisions of our demand estimates for 3Q20 and
4Q20 by 0.1 mb/d and 0.6 mb/d, respectively. For 2020, demand will fall versus 2019 by 8.4 mb/d,
more than the 8.1 mb/d seen in the last Report. In 2021, demand will grow by 5.5 mb/d. China
continues to recover strongly while India is showing renewed weakness.
- The recovery in global refining throughput is expected to slow from August to October due to the
impact of hurricane shutdowns in the US Gulf and seasonal maintenance elsewhere. Chinese and
Indian refinery runs fell in July and Hurricane Laura cut short the US recovery. The hurricane
shutdowns resulted in only a brief spike in refinery margins, which remain depressed due to weak
demand for premium transport fuels.
- OECD industry stocks rose by 13.5 mb (0.44 mb/d) to 3 225 mb in July. For the year to July, they
have increased by 334.5 mb, at an average rate of 1.57 mb/d. Preliminary data for August show that
industry crude stocks fell in all three regions: -19.3 mb in the US, -9.8 mb in Europe and -1.3 mb in
Japan (in total, nearly 1 mb/d). In August, volumes of crude in floating storage fell sharply by
59.9 mb (1.93 mb/d) to 168.4 mb, but early reports suggest volumes might rise in September.
- Crude futures prices rose until late August when weak financial markets and a growing overhang of
unsold barrels triggered a steady fall into September. Reports of floating storage also weighed on
sentiment. Reduced buying by China, which has lent support since April, is a major factor. From
$46.16/bbl in late August, Brent futures have fallen below $40/bbl. Physical prices (e.g. Dated
Brent) have moved to a significant discount versus futures, usually a sign of market weakness.