Total demand for July reached 83.8 million barrels per day, a year-on-year increase of 1.9 percent, according to the Energy Information Administration.

One-third of the growth comes from countries in the Organization for Economic Cooperation and Development, primarily Europe and Asia. Industrializing non-OECD countries, mostly China, India and OPEC members, account for remaining two-thirds of the increase.

Nonetheless, global economic growth remains strong, underpinning continued petroleum growth, despite oil prices hitting new records.

China continues to throttle domestic oil consumption by keeping domestic products prices so low that refineries are not interested in purchasing and refining expensive foreign oil. As a result, many Chinese regions suffer from shortages.

The situation has improved a little recently after the government increased retail prices for gasoline and diesel and revalued the currency, making it more attractive to sell products domestically and import oil and products.

China's inventories appear to be low as consumers cannot purchase what they need - unless suppliers hold back awaiting higher domestic prices.

How long can the Chinese government suppress oil consumption? The economy continues to see a growth of some 9 percent with oil growth at approximately in July.

U.S. oil demand also stagnates with transportation fuels dominating growth at an increase of 1 percent in the first half of 2005. Diesel has seen a 2 percent growth as overall product demand growth was less than 1 percent in the first half of 2005 and reached a negative for the month of July.

India's oil demand growth meanwhile reached nearly 10 percent for the month of July.

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