Oil Daily | OPEC's Production Boost Absorbed Without Inventory Builds, Supporting Tight Oil Market

【Global Oil Supply and Demand】

Global markets have absorbed the additional barrels produced by OPEC since spring without inventory builds, indicating the market required the higher supply, according to UAE's energy minister. OPEC's decision to boost oil production by 548,000 bpd in August surprised market participants, with expectations of inventory builds and lower prices after peak summer demand.

The American Petroleum Institute reported a significant increase in U.S. crude oil inventories, with an addition of 7.1 million barrels for the week ending July 4. Gasoline inventories fell by 2.2 million barrels, while distillate inventories declined by 800,000 barrels. Despite the inventory rise, the market remains tight, supporting oil prices.


【Oil-Producing Countries Dynamics】

Saudi Arabia increased its crude exports by 412,000 bpd in April, with exports averaging 6.17 million bpd. This rise in exports comes as the OPEC group continues to unwind 2.2 million bpd in production cuts, with a further boost of 550,000 bpd expected in September.


【Latest Oil Policies】

The European Parliament approved eased rules for natural gas storage refills in the EU to prevent price spikes. The new targets allow for a deviation of up to 10 percentage points in the 90% full storage goal, providing greater flexibility in case of difficult market conditions. This revision aims to lower Europe's gas prices while advancing energy independence.


【Industry News】

China leads in global renewable energy build-out, accounting for 74% of wind and solar projects under construction. The nation is building 510 GW more capacity, diversifying energy supply away from imports. However, Beijing's decision to reduce subsidies for mature industries poses challenges, as China continues to build coal-powered capacity for baseload generation.

Japanese car manufacturers Nissan and Suzuki face production challenges due to China's export controls on rare earth elements. These restrictions have caused shortages in car parts, affecting global automotive supply chains. Germany's automotive industry has also raised concerns over potential disruptions in manufacturing lines.


【Company News】

Nissan Motor has reduced production plans for its new Leaf electric vehicle due to shortages in car parts caused by China's controls on rare earth exports. Suzuki Motor has halted production of its Swift subcompact model. The automotive industry faces disruptions as China eases some export restrictions, but supply chain challenges persist.


【Others】

Iran's government denies requesting nuclear negotiations with the U.S., disputing President Trump's announcement of scheduled talks. Indirect talks were previously held before the Israel-Iran conflict, which saw military actions and increased oil prices due to geopolitical tensions. The situation has since stabilized, but market volatility remains.