Higher As Worry Over Chinese Demand Moderates; EU Struggles Towards Oil Embargo

WTI and Brent are ~$0.40 better off apiece, printing ~$110.20 and ~$112.80 respectively at writing. Both benchmarks have reversed earlier losses, with the move higher receiving support from news surrounding improvements in China’s ongoing COVID outbreak, easing some well-documented concern re: continued pressure on Chinese energy demand.

• To elaborate, COVID cases in China have continued their downward trend, with the tally of fresh cases for Sunday in the outbreak epicentre of Shanghai hitting their lowest levels in six weeks. Factory activity has increased, with battery-maker CATL declaring that production at their Shanghai factory has returned to pre-pandemic levels. Turning to Beijing, fresh daily cases have moderated (49 for Sunday), while the city has continued tightening pandemic control measures at a relatively slow pace.
• On the latter topic, authorities in Beijing further tightened measures in the city’s outbreak epicentre of Chaoyang, instructing office workers in the district to work from home, adding to existing measures for shutdowns of some non-essential businesses (e.g. gyms and theatres).
• Elsewhere, worry surrounding tightness in fuel supply arising from EU sanctions on Russian crude has eased amidst resistance towards the proposal from Hungary, which last voiced opposition to the proposal on Sunday. With the 27-member bloc requiring consensus to move ahead with sanctions, BBG source reports have pointed to discussions to be held “over the next few days”, aimed at addressing well-documented Hungarian opposition.