WTI and Brent are ~-$0.70 worse off apiece, with the former operating a shade below its Friday trough at typing. The move lower comes as participants in Asia react to the mix of disappointing PMIs out of Europe and the U.S., with the latter’s flash services PMI dipping into contractionary territory for the first time in nearly two years, exacerbating recession fears from some quarters ahead of this week’s FOMC, where a 75bp hike (or larger) may heighten expectations of reduced economic activity and energy demand.
- Daily COVID case counts in China have ticked lower (680 cases for Sun vs. 869 for Sat, with major cities continuing to report low case counts.
- Turning to oil supply concerns, the Canada-U.S. Keystone pipeline resumed normal operations over the weekend, restoring previously-reduced supply to the crude storage hub of Cushing.
- Elsewhere, Libya’s state oil operator reported on Friday that crude output has hit ~860K bpd, while pledging that “full” oil production (~1.2mn bpd) would be achieved within two weeks. Keeping within the country, deadly militia-led clashes were reported in the capital over the weekend and may be worth monitoring given the political bent of previous disruptions to crude production.
- Crude remains steeply backwardated, pointing to worsening tightness in near-term supply, with Brent’s prompt spread sitting at ~$4.97 at typing.