Light Bid As Chengdu Exits Lockdown

WTI and Brent are $0.50 better off apiece, extending a move off of their respective session lows on Friday.

• WTI and Brent caught an early, limited bid after the Chinese city of Chengdu (pop. ~21mn) announced an end to a two-week lockdown, to begin today.
• Both benchmarks failed to breach their respective Friday’s highs despite the above development, suggesting a lack of conviction behind the implied improvement in energy demand, as China’s COVID-zero strategy remains in place.
• Elsewhere, RTRS reports highlight that output at Kazakhstan’s Kashagan oil field will remain at ~100K bpd (usual ~400K bpd output) after an emergency gas release in Aug, with Energy Minister Akchulakov stating that output would recover “in October at best”.
• The prompt spread for Brent has risen to $1.40 at writing, returning to around their highest levels observed for Sep, pointing to a rise in worry re: tightness in near-term global crude supplies.
• Looking ahead, WTI and Brent continue to operate around the lower end of their YtD range amidst a rise in worry re: central bank-led economic slowdowns, with focus this week expected to centre around policy decisions from the Fed, BOE, and BOJ.