Higher In Asia; Supply Tightness Remains In Focus

WTI is ~+$0.40 while Brent (Sep ‘22 contract) is ~+$0.60, with WTI on track for its first monthly decline in seven months.

• The latest round of EIA inventory data released on Wednesday, saw WTI and Brent reverse course from fresh two-week highs to close $1-2 lower as a surprise build in gasoline and distillate stocks drew focus, easing worry re: tightness in domestic supply of oil products. On the other hand, a larger than expected drawdown in crude stockpiles (against BBG median) was observed, while Cushing hub stocks declined, hitting inventory levels last witnessed around Oct ‘14.
• Ecuador has declared a 30-day state of emergency including the entirety of two oil-producing provinces, drawing out ongoing production disruptions to its ~500K bpd crude output.
• Renewed, indirect Iran-U.S. nuclear talks in Doha have ended without any breakthroughs, with a U.S. official saying that talks have effectively progressed “backwards”.
• Up next, OPEC+ will end a two-day meeting later on Thursday, with headline risks appearing limited owing to previously-flagged coverage pointing to tightness in the group’s spare output capacity. RTRS source reports have also pointed to the group discussing August output policies, with seemingly little focus on discussion re: production afterwards.