Lower As Shanghai Enters Lockdown

WTI and Brent are ~-$3.30 at typing, operating a touch above Friday’s worst levels. The benchmarks have come under pressure in Asian hours owing to the declaration of a two-phase lockdown in the Chinese city of Shanghai (even after local authorities pushed back on the idea of a lockdown in the runup to the move), raising worry re: lower fuel demand in China.

• Elsewhere, major crude benchmarks have unwound some of last Friday’s gains as the Houthi rebel group declared a unilateral temporary ceasefire over the weekend (technically due to end later Monday) on a range of offensive actions towards Saudi Arabia. To recap, WTI and Brent reversed earlier losses to close higher on Friday after the Houthi rebels claimed responsibility over an attack on oil storage facilities in Jeddah.
• Turning to the U.S., RTRS source reports have pointed to the Biden administration considering a possible 30mn bbl release of crude from the country’s Strategic Petroleum Reserves, adding to 60mn bbls released earlier this month by IEA member countries.
• Looking at the week ahead, OPEC+ meets on Thursday. International pressure on the group to raise production has so far yielded little by way of concrete commitment, with heavyweights Saudi Arabia and the UAE continuing to emphasise “balance” and “stability” instead.