EnergyMedia Now (August 25, 2023) – Global oil inventories, already near a six-year seasonal low, slumped sharply over the past month with OPEC+ production cuts and resurgent demand starting to affect the supply of crude. Worldwide onshore stockpiles were seen at about 3.37 billion barrels as of Wednesday, a slump of about about 60 million barrels from a month earlier, according to energy analytics firm Kepler. They have recovered somewhat since Aug. 15.

Much of the reduction was seen in China, where data from industry consultant OilChem show operating rates at state-owned processors are set to hit a record this month, suggesting healthy demand for crude.

US nationwide inventories have also been steadily falling for months and are now at the lowest since end of 2022 and that of Cushing — the nation’s biggest storage hub — declined the most since 2021. All the while, Saudi Arabia has been extending its commitment to cut its output, while Russia also curbed its exports.

“This is a result of the strong demand we are currently seeing,” said Jorge Leon, senior vice president of oil market research at Rystad Energy. “The voluntary cuts of OPEC+, together with the additional 1 million barrels a day cut by Saudi Arabia, initially for July and now extended into September, have finally turned the market into a significant deficit.”

Oil prices have rallied 15% since late June with the International Energy Agency saying global oil demand will soar higher this month after hitting a record — despite the economic gloom, including in top buyer China.