In July, the OPEC Reference Basket (ORB) rose by $1.21, or 1.5%, m-o-m, to average $84.43/b. ICE Brent front-month contract rose by 88¢, or 1.1%, m-o-m, to stand at $83.88/b. The NYMEX WTI front-month contract rose by $1.78, or 2.3%, m-o-m, to average $80.48/b. DME Oman crude oil futures prices rose in July by 68¢, or 0.8%, m-o-m, to settle at $83.37/b. The front-month ICE Brent/NYMEX WTI spread contracted by 90¢, m-o-m, to stand at $3.40/b. The forward curves of oil futures prices strengthened, with all major crude benchmarks showing steeper backwardation. Money managers closed a large volume of long positions and raised short positions, particularly in the ICE Brent market.

World economic growth is forecast at 2.9% for 2024 and 2.9% for 2025, both unchanged from last month’s assessment. Following a strong growth in 2Q24, the US economic growth forecast for 2024 is revised up to 2.4%, while the 2025 forecast remains unchanged at 1.9%. The strong economic performance exhibited by the US economy in 1H24 has been offset somewhat by weaker economic performance in Japan. Japan’s economic growth forecast for 2024 is revised down slightly to 0.2%, while its 2025 forecast remains unchanged at 0.9%. For the Eurozone, the economic growth forecasts remain unchanged for both 2024 and 2025 at 0.7% and 1.2%, respectively. In the non-OECD, China’s economic growth forecasts remain at 4.9% in 2024 and 4.6% in 2025. India’s economic growth forecasts are unchanged for both 2024 and 2025, at 6.6% and 6.3%, respectively. Brazil’s economic growth forecasts are unchanged at 1.8% for 2024 and 1.9% for 2025. Russia’s economic growth forecasts remain at 3.1% in 2024 and 1.5% in 2025.

The world oil demand growth forecast for 2024 is revised down slightly by 135 tb/d from the previous month’s assessment. It now stands at a healthy 2.1 mb/d, well above the historical average of 1.4 mb/d seen prior to the COVID-19 pandemic. This slight revision reflects actual data received for 1Q24 and in some cases 2Q24, as well as softening expectations for China’s oil demand growth in 2024. Within the main regions, OECD oil demand is expected to grow by around 0.2 mb/d in 2024, while non-OECD oil demand is expected to increase by around 1.9 mb/d. In 2025, world oil demand is also revised slightly down by 65 tb/d, reaching about 1.8 mb/d. OECD demand is expected to expand by about 0.1 mb/d in 2025, with OECD Americas contributing the largest increase. Non-OECD demand is set to drive next year’s growth, increasing by about 1.7 mb/d, led by contributions from China, the Middle East, Other Asia, and India.

Non-Declaration of Cooperation (Non-DoC) liquids supply (i.e. liquids supply from countries not participating in the DoC) is expected to grow by 1.2 mb/d in 2024, unchanged from the previous month’s assessment. The main growth drivers are expected to be the US, Canada and Brazil. The non-DoC liquids supply growth forecast for 2025 is also unchanged at 1.1 mb/d. The growth is anticipated to be mainly driven by the US, Brazil, Canada and Norway. Natural gas liquids (NGLs) and non-conventional liquids from DoC Participating Countries are forecast to grow by about 0.1 mb/d to average 8.3 mb/d in 2024, followed by an increase of about 40 tb/d, reaching 8.4 mb/d in 2025. Crude oil production by the countries participating in the DoC increased by 117 tb/d in July compared with the previous month, averaging about 40.91 mb/d, as reported by available secondary sources.

In July, refinery margins in the US Gulf Coast increased, mostly supported by supply-side dynamics, as product inventories showed declines over the month due to weather-related refinery disruptions. This contributed to upward pressure on most US product prices, with the exception of jet/kerosene, boosting refining margins. In Singapore, lower crude oil prices and tighter product supplies in Northeast Asia due to planned and unplanned refinery maintenance supported regional refining economics. In addition, robust power generation demand from the Middle East continued to sustain Asian fuel oil markets, providing further support. Meanwhile, margins in Northwest Europe weakened, with losses seen across the barrel. This reflected strong refinery product output, a softer domestic middle distillate market, and lower European product exports in Rotterdam.

Dirty spot freight rates softened in July, m-o-m. The decline in Suezmax spot rates led losses, followed by Aframax and VLCCs. Suezmax spot freight declined, m-o-m, in July, as a lack of activity weighed on sentiment. On the West Africa-to-US Gulf Coast route, Suezmax rates fell 16%, m-o-m, as a US holiday and hurricane outages impacted tanker demand in the Gulf of Mexico. Reduced activities weighed on Aframax spot freight rates. The Cross-Mediterranean (Med) route averaged 15% lower for the month, amid a drop in tanker demand in the region. In the East of Suez, Aframax spot freight rates on the Indonesia-to-East route fell by 11% but remained higher compared to the level of a year ago. In the VLCC market, spot freight rates on the Middle East-to-East route declined by 2%, m-o-m. Rates on the West Africa-to-East route fell by 5%, m-o-m, despite increased departures to India. Rates for clean tankers East of Suez declined by 18%, m-o-m, amid reduced buying from South Korea and sufficient tanker availability. In contrast, West of Suez rates rose 12%, m-o-m, amid higher flows to Europe.

US crude imports in July remained close to the high levels seen in recent months, averaging 6.9 mb/d, according to preliminary data. Meanwhile, US crude exports moved back above 4 mb/d. US product exports in July partly erased the strong gains seen in the previous month, averaging 6.4 mb/d, amid lower flows to Mexico and China. Preliminary estimates indicate that OECD Europe crude imports remain below levels seen a year ago in June and July. Product imports are estimated to have declined in June, amid losses across all major products, although they partially recovered in July, led by fuel oil. In Japan, crude imports continued to fall in June, according to the latest official data, to average just below 2.1 mb/d. This represented a three-year low. Japan’s product imports also declined, amid lower inflows of LPG. China’s crude imports in June averaged 11.3 mb/d, about 11% lower than the robust growth seen in the same month last year, when the economy was rebounding after the pandemic. Product imports into China continued to fall from the high levels seen in April, as independent refiners scaled back refinery feedstock purchases. China’s product outflows rose by 5%, m-o-m, as higher exports of jet fuel and fuel oil outweighed a drop in diesel outflows. Meanwhile, India’s crude imports fell back m-o-m in June from the strong levels seen in the previous two months, averaging 4.5 mb/d, partly following seasonal trends. India’s product imports declined by 8%, m-o-m, amid lower inflows of LPG.

Preliminary June 2024 data for total OECD commercial oil stocks shows a draw of about 14.1 mb, m-o-m, to stand at 2,831 mb. This is about 116 mb below the 2015–2019 average. Within the components, crude stocks fell by 17.3 mb, m-o-m, while product stocks rose by 3.1 mb. OECD commercial crude stocks stood at 1,365 mb in June. This is 101 mb less than the 2015–2019 average. OECD total product stocks stood at 1,467 mb in June. This is 15 mb below the 2015–2019 average. In terms of days of forward cover, OECD commercial oil stocks fell by 0.1 days, m-o-m, to stand at 61.2 days in June. This is 0.6 days less than the 2015–2019 average.

Demand for DoC crude (i.e. crude from countries participating in the Declaration of Cooperation) is revised down by 0.1 mb/d from the previous month’s assessment to stand at 43.0 mb/d in 2024, which is around 0.8 mb/d higher than the estimate for 2023. Demand for DoC crude in 2025 is revised down by 0.2 mb/d from the previous month’s assessment to stand at 43.6 mb/d, around 0.6 mb/d higher than the estimate for 2024.