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OIL

WTI is ~$0.60 and Brent is ~+$0.90 at typing,operating around session highs and building on Friday’s gains after reversing earlier losses.

  • To recap, both benchmarks closed ~$2 firmer apiece on Friday as U.S. Pres Biden landed in Saudi Arabia, with a lack of concrete, near-term measures re: crude output increases observed. State Dept advisor Hochstein has since stated that producers will take "more steps in the coming weeks" (without naming specific countries/targets), while Saudi officials have re-iterated that supply decisions would be made in consultation with OPEC+.
  • The prompt Brent spread remains elevated, operating around ~$3.95 at typing, pointing to persistent tightness in the outlook for crude supplies.
  • Libya’s new state oil company chairman has stated that production will be fully restored within a week, potentially returning >500K bpd in output to global supplies.
  • Elsewhere, worry surrounding lower energy demand in China remains elevated as fresh daily COVID cases for Sun were reported at 510, after Sat’s 580 cases (two-month high). Shanghai has also ordered mass testing in 9 of 16 districts, with authorities describing the situation as “severe”, while BBG reports have pointed to mass testing to be conducted in Tianjin (pop. ~13.8mn).
  • BBG source reports have highlighted that Indian fuel demand in July so far has declined M/M (albeit as expected during the monsoon season), adding to wider worry re: cooling Asian energy demand.

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