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It’s not for a lack of US demand

- The ongoing US inventory build is not for a lack of US oil demand "US petroleum products inventories built for the seventh consecutive week, according to the US Department of Energy (DOE). While this would seem to be consistent with the recent slowdown in the pace of US economic growth, the build in US petroleum products is not due to a lack of US oil demand, in our view, but is being driven by extremely high crude runs by US refineries. In fact, US oil demand growth remains strong, averaging 563 thousand b/d year-over-year in the last four weeks, and US export demand – particularly for distillate – continues to strengthen and is now approaching the record levels reached in the summer of 2008, when oil topped $145/bbl on the back of strong global distillate demand."
- Chinese oil demand continues to reach new highs "Chinese total petroleum demand reached 9.21 million b/d in June, the highest number on record. China has also imported yet another record amount of crude oil in June, rebounding from relatively weak May levels.
Importantly, while Chinese petroleum demand growth had been primarily driven by demand for so-called other oil products, it is now shifting more towards transportation fuels such as diesel, gasoline and jet fuel. Diesel accounts for almost 40% of Chinese demand growth in June, while motor gasoline accounts for 22%."
- The IEA gives its first look at 2011 supply and demand "The IEA has recently reported its first outlook on 2011 demand and supply, forecasting non-OPEC supply to grow at 300 thousand b/d year-over-year in 2011. In contrast, we expect non-OPEC supply will actually decline by that amount. This difference arises from differing expectations for several
key areas, notable: Norway, Egypt, Azerbaijan, Columbia, Russia and Brazil."
GoldmanSachs Energy Weekly 20100726

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