Lower In Asia; Shanghai Resets Lockdown Counter

WTI and Brent deal ~$1.30 weaker apiece, extending a pullback from Wednesday’s best levels at writing.

• Virtually no discernible progress has been made re: overcoming Hungarian opposition to EU sanctions on Russian energy, with Budapest on Wednesday notably demanding “hundreds of millions of dollars” to replace Russian crude - a move that senior European diplomats have reportedly voiced opposition to, despite a European Commission (EC) plan to do so. Looking ahead, the EC is due to schedule a video conference between European Leaders and Hungarian leader Viktor Orban.
• Looking to China, elevated hope for an end to lockdowns in Shanghai took a hit earlier in the session after two cases were reported “in the community” for Wednesday, keeping in mind that officials have stated that three days of zero community spread is required for there to be an easing in restrictions. Zooming out, COVID cases in the city and nationwide remain relatively low however, coming in below 2K for another day.
• The latest round of U.S. EIA crude inventory data crossed on Wednesday, with a large surprise build in U.S. crude stockpiles observed, adding to the increase observed last week as well. On the other hand, there was a drawdown in gasoline, distillate, and Cushing hub stocks, with distillate inventories noted to have previously hit 14-year lows in last week’s data release.
• The ongoing drawdown in U.S. distillate stockpiles comes as analysts have flagged the start of the “driving season” in the U.S., set to begin in end-May.
• Up later today, the International Energy Agency is due to release their monthly Oil Market Report at 0900 BST.