Global demand and supply are moving closer to balance this quarter than at any time in the past three years, providing some short-term support to oil prices. But global inventories are at record highs and will take a long time to run down unless supply falls short of demand soon — and this looks unlikely. Global supply rose in July for a second month running, with higher output from Opec and non-Opec sources. Global crude production has rebounded by over 1.5mn b/d since May and was only 300,000 b/d lower in July than a year earlier. Opec is setting new records, offsetting much of the reduction in non- Opec output this year. Opec produced 750,000 b/d more crude in January-July than in the same period last year. If sustained, this will push back the point at which the market rebalances.
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