Higher In Asia As Stagflation Worry Eases; Supply Picture Shows Potential Improvement

WTI is ~+$2.50 and Brent is ~+$1.40 at writing, operating a little below their respective best levels made on Monday. Both benchmarks have extended a move off of recent lows following the sharp $7 - $8 tumble seen last Friday, with participants focused on worry re: stagflationary risks and the corresponding decline in energy demand.

• To recap, comments from U.S. Pres Biden that a recession is not “inevitable” helped major crude benchmarks rebound from worst levels on Monday, with Brent rising from a one-month low in the process.
• Keeping within the U.S., Biden is expected to announce a decision this week to potentially suspend a federal gasoline tax, following Yellen’s remarks on Sunday that a gasoline tax holiday was an idea “worth considering”. This however comes as U.S. gasoline inventories have declined for over two straight months (EIA data), with stockpiles >10% below their five-year seasonal averages.
• A BBG report has pointed to Russian exports of seaborne crude to Europe hitting two-month highs last week, suggesting that some European resistance to buying Russian crude has ebbed. Crude exports to Asia are continuing to rise (mainly to China and India), with overall Russian crude production reportedly down by 300K bpd against pre-invasion levels (as stated by Russian DPM Novak late last week).
• Elsewhere, Iran has reportedly dropped a major sticking point in stalled indirect nuclear negotiations with the U.S., with source reports from the London-based Middle East Eye stating that Tehran has dropped its requirement that the Iranian Revolutionary Guard Corps (IRGC) should be removed from the U.S.’s list of terror groups - a previously highlighted “red line” for the Iranians. The U.S. was said to have not responded to the offer yet.