Back From Best Levels; Tight Supply Factors Abound

WTI and Brent sit a little above neutral levels after paring an earlier, light bid, leaving both benchmarks operating around the bottom of Thursday’s range at writing.

• To recap, WTI and Brent closed ~$3-4 lower on Thursday, falling to session lows after OPEC+ announced no change to its output targets for August, adding to worry re: slowing economic growth after the release of weaker than expected consumer spending data and the previously-flagged Atlanta Fed GDPNow pointing to a technical recession in H1 ‘22.
• Thursday’s move lower in oil markets also comes despite wider, persistent tightness in the outlook for global crude supplies, with a few participants pointing to the squaring of positions ahead of the upcoming extended weekend in the U.S. (Independence Day) as a potential driver.
• Looking to the U.S., President Biden has stated that he will ask all Gulf states to increase crude production ahead of a closely-watched three-stop visit to the Middle East later this month, although Nigeria and French President Macron have previously pointed out a lack of spare capacity from the likes of the UAE and Saudi Arabia.
• Elsewhere, Libya has declared force majeure over the Asidra and Ras Lanuf terminals (>500K bpd capacity, as well as the El-Feel oilfield (~90K bpd capacity).
• A previously-flagged worker’s strike in Norway’s oil & gas sector is expected to affect ~4% (~83K bbpd) of the country’s capacity.