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Oil Slips as Xi & Biden Take Dim View of High Energy Prices

  • WTI and Brent crude futures head into the close in negative territory, with both benchmarks shedding around 2% apiece. The WTI-Brent widened marginally, with markets focusing on the supply outlook and potential action from the White House on high fuel costs.
  • While prices were briefly supported by weekly DoE data showing a draw of 2.1mln bbls vs. Exp. build of 1mln, pressure built into the close as focus turned to data showing the US SPR shed 3.25mln bbls across the week. While this doesn't equate to a reserve release from the US SPR (these adjustments are usually technical in nature), that's the largest draw on reserves according to data going back over a decade.
  • Elsewhere, markets continue to speculate over the likelihood of coordinated action on energy supply from both the US and Chinese Presidents, with wires confirming the two leaders discussed their views on energy, although no decisions were made on the issue.
  • Resultingly the WTI futures curve flattened slightly, with the most notable pressure seen in the front month contracts. The Dec-21 future slipped to $78.81, but managed to steer clear of first support at $78.37, the 50-day EMA.

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