Lower In Asia; OPEC Production Commitments In Focus Ahead Of Meeting

WTI and Brent are ~$2.40 softer apiece at typing, off one-week lows made earlier in the session. Both benchmarks came under pressure after a previously flagged FT source report pointed to the potential for an immediate increase in crude production by OPEC heavyweight Saudi Arabia, possibly announced at an OPEC+ meeting later on Thursday.

• To elaborate, the source report outlined that production increases scheduled for Sept ‘22 could be brought forward to Jul and Aug, while highlighting that “Saudi Arabia has indicated to western allies that it is prepared to raise oil production should Russia’s output fall substantially under the weight of sanctions”.
• On previously flagged WSJ source reports re: the exemption of Russia from OPEC+ output targets, RTRS source reports have since suggested that the group is not actively discussing the measure in recent meetings, likely unwinding some of the downward pressure on major crude benchmarks.
• Keeping within the Middle East, BBG source reports have said that U.S. President Joe Biden would “likely” visit Saudi Arabia (among other Gulf Cooperation Council countries) later this month, driving debate re: OPEC-centred efforts to increase crude production.
• Elsewhere, the latest round of U.S. API inventory estimates crossed late on Wednesday, with reports pointing to a larger than expected drawdown in crude stocks, reversing a small build reported last week (although little movement was observed in major crude benchmarks). A decline in gasoline stockpiles was reported as well, while there was a build in distillate and Cushing hub inventories.
• Looking ahead, U.S. EIA inventory data is due later on Thursday (1600 BST), with WSJ estimates calling for a decline in crude and gasoline stockpiles as well.