OPEC numbers: OPEC released its monthly report yesterday, where secondary sources put OPEC production over the month of June at 29.83MMbbls/d- 68Mbbls/d lower month-on-month. Iran saw the largest decline, with output falling by 142Mbbls/d over the month. Meanwhile, Saudi Arabia increased production by 126Mbbls/d, taking production over the month to 9.81MMbbls/d.
Looking at OPEC’s outlook for the global market suggests that the group will need to lower output from current levels over 2020. OPEC is forecasting global oil demand to average 101.01MMbbls/d next year, and expects non-OPEC supply to average 66.87MMbbls/d. Once taking into account OPEC NGL production, the group is currently producing 560Mbbls/d more than needed over 2020. Assuming OPEC’s demand and non-OPEC supply forecasts are correct, the group may need to continue with the deal for longer than anticipated over 2020.
This morning, the IEA will be releasing its monthly report, and the market will be watching closely to see if the agency makes any further revisions lower to their demand growth forecasts.
US Gulf storm: Tropical Storm Barry continues to move towards the Louisiana coastline, and further offshore production in the Gulf of Mexico has been shut in. The Bureau of Safety and Environmental Enforcement (BSEE) reported yesterday that 1.01MMbbl/s of production has been shut in, which is equivalent to a little over 53% of Gulf of Mexico production. Looking ahead concerns will grow around the significant amount of refining capacity at risk. Louisiana has a refining capacity of 3.7MMbbls/d, which is 20% of total US refining capacity. Disruption to refining operations as a result of the storm would likely prove supportive for product cracks, and given the growing importance of the US as a refined product exporter, this strength would likely be felt in other regional markets as well.