A Little Higher As Libyan Disruption Assessed Against Restart Of Chinese Factories

WTI is ~+$0.20 and Brent is ~+$0.50 at typing, operating a little below three-week highs made on Monday.

• Previously flagged disruptions to Libyan crude facilities due to anti-govt protests have expanded, exacerbating worry re: tightness in global supply. BBG source reports are pointing to >500K bpd in crude output being taken offline for now, a little under half of Libya’s current output.
• Looking to China, authorities in Shanghai have begun a conditional re-opening of some factories in the city (specifically a “whitelist” of 666 companies across a few industries), although reports continue to point to the potential for supply chain disruptions and restricted market access for goods produced amidst continued lockdowns elsewhere.
• Keeping within the country, five of seven districts in China’s largest steel production hub of Tangshan re-entered lockdown conditions after 29 COVID cases were reported for Monday, with a mass testing regime due to be implemented. This comes after the previous lockdown was recently ended (lasted between Mar 22 to Apr 11), raising expectations for national crude steel output to remain under pressure for now.
• Elsewhere, the U.S. EIA’s crude drilling report crossed on Monday, highlighting continued growth in U.S. shale production, with the forecast for May predicting the largest monthly production increase since Mar ‘20. A note that the report also flagged that inventories of low-cost, ready-made wells (DUCs) are hitting multi-year lows, pointing to potential difficulties in increasing crude production in the future.