A Little Below One-Week Highs

WTI and Brent are ~-$0.50 softer apiece at writing, operating a little below their respective one-week highs made on Thursday. Both benchmarks are on track for a higher weekly close amidst a moderation in demand destruction worry in recent sessions, but remain well short of unwinding last week’s steep selloff, with concern re: tightness in global crude supplies continuing to pull away from recent extremes (Brent’s prompt spread sits at ~$1.27 vs. the ~$2.80 peak witnessed at the beginning of August).

• WTI and Brent closed ~$2 higher apiece on Thursday despite diverging demand forecasts from the International Energy Agency (IEA) and OPEC, with the former highlighting that OPEC+ is unlikely to raise output in the near-term due to severely limited spare capacity, while flagging the potential for further disruptions to Russian crude exports as another risk to supply.
• Turning to the forecasts, the IEA boosted its ‘22 global demand growth projections by 380K bpd while OPEC cut its own ‘22 demand growth forecasts by ~260K bpd later in the session, with the latter also predicting that global oil markets will experience a surplus in Q3 ‘22 on simultaneous supply increases from non-OPEC+ members.
• Elsewhere, crude has also drawn support from news of pipeline and oil & gas field closures in the Gulf of Mexico due to leaks, with Shell expecting the affected pipelines (capacity ~500K bpd of crude) to return to service on Friday, with no timeline given re: restarting production at the fields at writing.