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Global oil demand fell by an estimated 1.1 million barrels per day (bpd) in July this year the latest data from the Joint Organizations Data Initiative (JODI) showed on Monday. Historically, global oil demand normally rises rather than falls in July.
The demand decline was driven by drops in consumption in China, India, Indonesia, developed European economies, and Saudi Arabia, according to JODI, which compiles self-reported data from many countries.
The July fall in demand is in contrast to the five-year average for the month of July, excluding the pandemic years of 2020-2021, which shows demand rising seasonally by an average of 350,000 bpd, the Riyadh-based International Energy Forum (IEF) said.
As a result of lower demand in July, global product inventories in July increased by 63 million barrels—more than three times the average seasonal increase. Crude inventories increased counter-seasonally by 9 million barrels. However, global crude and product inventories were still nearly 438 million barrels below the five-year average, the JODI data showed.
In Saudi Arabia, demand fell counter-seasonally by 192,000 bpd in July, which was the first monthly decline since February. Chinese oil demand dropped by 191,000 bpd in July and was 655,000 bpd below year-ago levels. However, Chinese demand was still 135,000 bpd above July 2019 levels, according to the JODI data.
Chinese demand was hit by the snap COVID lockdowns which have discouraged travel this summer. China is even expected to see its oil demand fall in 2022 for the first time in more than three decades.
“Growth in global oil demand continues to decelerate, weighed down by renewed Chinese lockdowns and an ongoing slowdown in the OECD,” the International Energy Agency (IEA) said in its closely watched Oil Market Report last week.
The IEA revised down its growth estimate for 2022 by 110,000 bpd from last month’s assessment and now expects global oil demand to grow by 2 million bpd this year.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.