Brent strength on China easing as Saudi raises prices

Crude oil rallies up towards recent highs at 121.89$/bbl as China emerges from covid lockdown restrictions and as Saudi Arabia raise their official selling prices.

• Brent AUG 22 up 0.6% at 120.39$/bbl
• WTI JUL 22 up 0.6% at 119.53$/bbl
• Gasoil JUN 22 down -0.1% at 1316.75$/mt
• WTI-Brent up 0.15$/bbl at -3.49$/bbl
• China continues to slowly release covid restrictions with Shanghai and Beijing both gradually opening back up. Easing restrictions and government economic support are raising the prospect of returning oil demand and adding bullish pressure to the market.
• Saudi Arabia raised the Arab Light OSP to Asia more than expected by 2.1$/bbl to 6.5$/bbl above Oman/Dubai. The increase was expected to be 1.5$/bbl. The OSP to Europe increased to +4.3$/bbl above Brent and to US was unchanged at 5.65$/bbl above ASCI.
• OPEC+ last week agreed to bring forward production increases by raising production by 648kbpd in Jul and Aug. Saudi Arabia and UAE are the only member with significant spare capacity.
• Tight markets continue to drive refined product markets higher after the start of the US driving season is expected to boost demand and with supply struggling to keep up. The strength in the time spreads remains with oil curves still strongly backwardated.
• Brent AUG 22-SEP 22 up 0.01$/bbl at 2.7$/bbl
• Brent DEC 22-DEC 23 up 0.05$/bbl at 16.03$/bbl