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Oil Market Snapshot – July 2019 Hormuz Tensions Support, Economy Caps Brent in July

Brent was range-bound between $62/bbl and $68/bbl in July. Tensions in the Strait of Hormuz have kept a floor under prices, while concerns over global growth have provided the cap. We have trimmed our 2019 Brent forecast to $67.07/bbl (-$2.93/bbl on previous), on weak 2H19 consumption growth data and revised down GDP forecasts from the IMF. Our global demand growth forecast for 2019 is also revised down to 1.18 million b/d (-60,000 b/d m-o-m) for the same reason. Our global supply growth forecast for 2019 is 700,000 b/d (-150,000 b/d), led by the US (+1.1 million b/d) but offset by continued OPEC declines (-920,000 b/d). US LTO’s production growth is weaker this year, in line with our expectations, as access to capital tightens and higher field decline rates bite. OPEC compliance with the Vienna Group deal fell to 122% in June, as summer season arrives and Saudi production ticks upward. The Vienna Group has rolled over its existing deal for nine months, in line with our expectations since its inception....

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