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Back From Best Levels; Shanghai COVID Outbreak Eyed


WTI is ~+$0.10 and Brent is ~+$0.70, with WTI trading a little below $100 at typing. Both benchmarks pared earlier gains of as much as ~$2.60 to $3.00, seeming to catch a bid on news re: a court order to halt oil loadings at a Caspian Pipeline Consortium (CPC) port on the Black Sea, potentially affecting ~1.9mn bpd in Kazakh crude exports.

  • To recap Tuesday’s price action, both benchmarks closed ~$10 weaker, moving sharply lower amidst growing recession fears in both the U.S. and Europe, fuelling worry re: demand destruction.
  • Goldman analysts have since stated that Tuesday’s move may be overdone, worsened by limited liquidity and technicals, highlighting persistent, fundamental supply tightness in crude markets.
  • Developments out of China may have applied pressure to crude in Asia, as lockdown fears have again surfaced. Shanghai on Tuesday re-imposed mass testing regimes (in line with their well-documented zero COVID policy) in 12 of the city’s 16 districts, with tests due to be completed by Thursday. Total daily case counts and cases outside of quarantine (two reported for Wednesday morning) in Shanghai have ticked higher, with the latter being a crucial metric for authorities re: pandemic monitoring.
  • Elsewhere, indirect Iran-U.S. nuclear talks have seen virtually zero progress, with the State Dept.’s Price saying that no other talks are scheduled at present.
  • A short-lived strike in Norway’s O&G sector ended less than a day after it commenced after intervention from the Norwegian gov’t, with the move averting an estimated >300K bpd decline in crude production.

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