A Little Off Five Month Lows; Demand Worry In Focus

WTI and Brent are ~$0.20 firmer apiece, operating a little above their respective troughs established on Thursday. Both benchmarks are on track for a lower weekly close, weighed down in recent sessions by demand destruction worry amidst high energy prices and well-documented recession fears, offsetting moderating concerns re: disruptions to near-term crude supplies.

• To recap, WTI and Brent hit fresh six- and five-month lows respectively before closing >$2 weaker on Thursday, with crude now back at ranges observed before the Russian invasion of Ukraine.
• U.S. energy data this week has contributed to the bulk of debate re: demand destruction, with Cushing hub stocks reporting a build for a fifth straight week, while gasoline consumption remains below ‘20 levels even as the country eases out of “peak demand” season.
• Keeping within the country, EIA data has shown U.S. airline fuel consumption dipping below last year’s levels (on a seasonal basis) amidst reduced flying activity, with the industry reeling from labour woes and high fuel costs.
• Looking to supply concerns, RTRS source reports on Thursday pointed to Saudi Arabia and the UAE being prepared to make a “significant increase” in oil output during the winter months of ‘22 should a “severe supply crisis” arise. Estimates of OPEC’s spare capacity typically place it at >2mn bpd at present, concentrated in Saudi Arabia and the UAE.