Since Monday, oil prices have fallen by 2.2-2.5% due to pessimistic economic data from China and a gradual decline in demand.

In July, China reduced crude oil imports by 19% compared to June, reaching a 6-month low of 10.33 million barrels per day. Additionally, oil inventories in the country increased to a record 1.02 billion barrels by July 27th. Industrial production in China grew by 3.7% in July, below the expected 4.3%, and retail sales increased by 2.5%, the slowest growth in the past 5 months.

In July, China’s exports decreased by 14.5% compared to July 2022, reaching a 5-month low of $281.76 billion, while imports decreased by 12.4% to $201.16 billion, the lowest since May 2020. Import volumes have been declining for 5 consecutive months, partly due to reduced domestic demand. From January to July, exports decreased by 5% compared to the same period last year, imports by 7.6%, and the trade surplus reached $489.57 billion.

India, the world’s third-largest consumer of crude oil, reduced its imports by 1.3% to a 7-month low of 19.7 million tons in June, adding further pressure on prices.

According to Bloomberg, in the 4 weeks leading up to August 6th, crude oil deliveries from Russia decreased to 3.02 million barrels per day, 870,000 barrels per day below the peak level in mid-May.

Brent crude oil prices exceeded $70 per barrel, and the discount relative to the benchmark Brent decreased to $13.9 per barrel due to the circumvention of the price ceiling sanctions ($60 per barrel) by inflating the cost of commissions and transportation of Russian oil associated with Russian vessels. This approach has brought Moscow an additional $1.2 billion over 3 months.

Starting from Monday, October Brent oil futures on the ISE exchange fell by 2.2% to $84.9 per barrel, increasing by 8.1% over the month, which supported vegetable oil prices.

September palm oil futures on the Malaysian exchange remain stable at 3783 ringgit per ton or $818 per ton (0% for the week, -3.5% for two weeks) due to increased demand from India.

On the Chicago exchange this week, September soybean oil futures increased by 2.7% to $1451 per ton (+5.4% for the month) due to reduced soybean stocks, while December futures increased by 2.8% to $1364 per ton (+2.5% for the month) based on expectations of increased soybean harvest in the US.

Demand prices for Ukrainian sunflower oil fell by $30-40 per ton to $800-830 per ton FCA, and to $920 per ton delivered to buyers, due to reduced demand amid increased supply of rapeseed oil to the EU.

According to the Solvent Extractors’ Association of India (SEA), in July the country imported 1.77 million tons of vegetable oils compared to 1.31 million tons in June and 1.21 million tons in July 2022. Palm oil imports in July increased from 683,000 tons to 1.08 million tons, sunflower oil from 190,000 to 327,000 tons, soybean oil decreased from 437,000 to 342,000 tons, and vegetable oil stocks increased by 12% to 3.2 million tons. In total, in 2022/23 MY, India increased palm oil imports by 46% from 4.86 million tons to 7.11 million tons, sunflower oil imports by 45% to 2.18 million tons, but reduced soybean oil imports by 15% to 2.82 million tons.

The Egyptian GASC will hold an international tender on August 16th for the purchase of vegetable oils with delivery from September 20th to October 8th, which will set a new price benchmark.