Lower In Asia; Demand Outlook In Focus As Growth Worries Linger

WTI and Brent are ~$0.30 weaker apiece at typing, operating a little shy of their respective troughs made on Friday.

• To recap, both benchmarks lodged a lower weekly close (first in seven weeks for WTI, four for Brent) last Friday. Attention had coalesced around the possibility of slowing economic growth and weaker fuel demand, in a week that saw the Bank of England, Swiss National Bank, and the Fed raise rates, with the USD (DXY) briefly hitting a 20-year high as well.
• Looking to China, while daily COVID case counts and lockdowns around the country have generally continued easing, domestic fuel demand remains weak, with domestic refiners reportedly operating at around two-thirds capacity in the face of relatively strict export quotas as well (keeping in mind they are generally meant to serve domestic needs). Despite aforementioned improvements, worry re: further domestic COVID-related restrictions are continuing to linger however, with fresh reports pointing to some neighbourhoods in the city of Shenzhen (~12.8mn pop) being placed under lockdown.
• Average gasoline prices in the U.S. have registered their first weekly decline in nine weeks, dipping below the closely-watched $5/gallon mark in the process. U.S. Energy Secretary Granholm has however warned of a persistent “upward pull on demand” in light of the ongoing “summer driving season” and the tight supply outlook globally, driving debate re: the outlook for U.S. fuel demand.
• Libya’s crude production (amidst previously flagged, ongoing political woes) has risen to ~700K bpd, an improvement over the 100K - 150K bpd reported last Tuesday. Looking ahead, the country’s parliament-backed PM over the weekend stated that the country is unlikely to hold elections in ‘22, possibly troubling the crude production outlook for the rest of the year.