Global Oil Market - Aug 3

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On July 31 Reuters reported oil prices are set for a slow crawl upwards this year as the gradual easing of coronavirus-led restrictions buoy demand, although a second COVID-19 wave could slow the pace of recovery, a Reuters poll showed on Friday. The survey of 43 analysts and economists forecast benchmark Brent crude to average $41.50 a barrel in 2020, up slightly from the $40.41 consensus in last month's survey and compared with around $42 average for the benchmark thus far this year. It is expected to average $49.85 in 2021. The 2020 outlook for West Texas Intermediate rose to $37.51 per barrel from June's $36.10.

On July 31 Bloomberg reported that China's July manufacturing PMI came in at 51.1 vs. 50.9 in June, according to data from the National Bureau of Statistics. A PMI over 50 indicates that China's economy is growing.

On July 31 Bloomberg reported that Eurostat in Luxembourg reported 2Q20 European gross domestic product, which showed a 12.1% reduction vs. 1Q20 levels. Spain’s GDP shrank more than forecast in the second quarter with a record 18.5% drop in output, led by plunges in consumer spending and investment, and is the deepest reported so far in Europe. France reported a 13.8% y/y GDP contraction in 2Q20 while Italy’s economy shrank 12.4%.

On July 31 Reuters reported U.S. crude oil production plummeted in May, falling a record 2 million b/d to 10 million b/d, the U.S. Energy Information Administration said in a monthly report on Friday. The drop, the sharpest monthly decline on record according to data going back to 2005, came after a price crash this spring due to oversupply and reduced demand owing to the coronavirus. Top crude producer state Texas cut production by 764,000 b/d while North Dakota's output fell by 353,000 b/d in the month. Offshore in the U.S. Gulf of Mexico fell by 300,000 b/d, the report said. Gasoline demand was down 23.5% from year-ago levels at 7.2 million b/d. Demand for diesel and other distillate fuels fell 12.6% from a year earlier to 3.5 million b/d. Monthly gross natural gas production in the U.S. Lower 48 states, meanwhile, dropped 5.7 Bcf/d in May to 97.4 Bcf/d, its lowest monthly average since October 2018, according to the EIA 914 report. That was the biggest monthly decline since September 2008. U.S. gas output hit an all-time monthly high of 107.0 Bcf/d in November 2019 but has fallen almost every month since. In Texas, the biggest gas producing state, output fell by a monthly record of 2.3 Bcf/d, or 8.1%, to 26.4 Bcf/d in May. A lot of the gas in Texas is associated gas from oil production. In Pennsylvania, the second-biggest gas-producing state, output dropped by a monthly record of 0.7 Bcf/d to 19.3 Bcfd in May.

On July 31 Reuters reported OPEC oil output has risen by over 1 million b/d in July as Saudi Arabia and other Gulf members ended their voluntary extra supply curbs on top of an OPEC-led deal, and other members made limited progress on compliance. The 13-member Organization of the Petroleum Exporting Countries pumped 23.32 million b/d on average in June, the survey found, up 970,000 b/d from May's revised figure. An easing of lockdowns and lower supply have helped oil climb above $40, although concerns of a second wave of COVID-19 are keeping a lid on gains.