Off Best Levels In Asia; Demand Worry Remains In Focus

WTI is ~+$1.20 and Brent is ~+$1.40, with both benchmarks edging away from their respective session highs after a ~$1.50 surge earlier, with that move higher potentially being a delayed reaction to reports of a disruption to the Canada-U.S. Keystone pipeline.

• To elaborate, BBG sources pointed to Keystone operator TC Energy reducing flows to the crude storage hub in Cushing (where WTI is delivered) by ~15% due to a “power supply glitch”, raising worry re: tightness in Cushing inventories.
• WTI and Brent have however come nowhere near challenging their respective best levels on Thursday, with the well-documented rise in recession-related worry on Thursday (particularly in the U.S. and EU) exacerbating concern from some quarters re: reduced energy demand.
• Elsewhere, Libyan crude output has risen above 700K bpd, short of the ~1.2mn bpd pre-crisis (keeping in mind the NOC had promised to restore production “within a week”, last Friday).
• Brent’s prompt spread continues to point to rising worry re: near-term crude supply, with the measure hitting ~$4.69 at typing, compared to ~$4.00 at the start of the week.
• Elsewhere, daily COVID case counts in China remain near two-month highs, with 880 reported for Thu vs. 826 for Wed. While the situation in major cities continues to stabilise, worry re: the country’s economic output remains elevated, with some participants likely eyeing industrial profit data next week, following warnings from the country’s steel industry earlier this week re: weak demand and other business challenges.