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Fresh Multi-Month Lows As Demand Worry Rises

OIL

WTI and Brent are ~$1.30 worse off apiece, with both benchmarks hitting their lowest levels observed since Jan ‘22 amidst elevated demand-related worry.

  • To elaborate, the expansion of COVID-related control measures across China has driven the outlook for crude demand lower, with an indefinite lockdown on the city of Chengdu (pop. ~21mn) keeping worry elevated re: further mass lockdowns on major cities.
  • The outlook for travel-related fuel demand has also weakened, with reports pointing to international air travel remaining a fraction of pre-COVID levels, while authorities have continued to postpone/cancel major events in view of the ongoing outbreak (e.g. the Lujiazui financial forum in Shanghai and Asia’s biggest pet fair in Shenzhen).
  • Elsewhere, an ongoing rally in the USD (DXY) to fresh cycle highs has continued to provide headwinds to crude.
  • Looking ahead, the EIA will release their Short-Term Energy Outlook (STEO) for September.
Energy BulletsCommodities
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