Firmer Amidst Progress In Shanghai’s COVID Fight

WTI and Brent are ~$2.00 better off at writing apiece, operating around session highs and comfortably above their respective six-week and four-week lows made on Monday.

• To recap, both benchmarks closed ~$4 lower on Monday amidst heightened worry re: China’s energy demand outlook as the country deals with a well-documented COVID outbreak. Elsewhere, crude remains under pressure as debate re: the International Energy Agency’s (IEA) plan to release up to 240mn bbls of crude (when including the U.S.) over 6 months, continues to do the rounds in Asia.
• Focusing on China, crude has caught a bid on Tuesday amidst signs of some improvement in Shanghai’s pandemic situation, with authorities partially easing lockdowns in some “low-risk” areas, while reporting over 23K fresh local COVID cases for Apr 11, a reduction from the Apr 10 all-time high above 26K. Elsewhere, partial restrictions on movement and indoor activities are still in place for the city of Guangzhou (pop. ~18mn), with authorities bracing for a potential surge in cases there.
• Expectations for OPEC to raise monthly production quotas remain weak, with the group’s SecGen Barkindo saying on Monday that missing Russian crude supplies could exceed 7mn bpd, with the resulting shortfall being “totally out of” OPEC’s control. A note that this comes on the back of
• The prompt spreads of both WTI and Brent futures continue to weaken from their peaks in March and have narrowed to near-neutral levels at typing, suggesting an easing in prior worry re: tightness in global crude supplies.