On Track For Lower Weekly Close; Supply Outlook Remains Tight

WTI and Brent are ~$0.40 weaker apiece, backing away from their respective Thursday peaks at writing. Both benchmarks remain on track for a lower weekly close but are off multi-month lows made earlier in the week, having found some poise in recent sessions after U.S. inventory data pointed to persistent tightness in crude supplies, with wider optimism re: increases to global supplies of oil moderating from their extremes as well.

• To recap, WTI and Brent closed between $2-3 firmer on Thursday for a second consecutive higher daily close, drawing support from a moderation in demand destruction worry from better-than-expected prints for the Philly Fed survey and jobless claims (both initial and continuing).
• OPEC Sec Gen al-Ghais on Thursday said that the demand for crude remains “robust” despite the group reducing its forecast for demand growth in ‘22 to 3.1mn bpd last week, while also hinting at possible production cuts in coming OPEC+ meetings “if necessary”.
• Turning to supply matters, Argus source reports on Thursday re: OPEC+ compliance pointed to the group missing collective output targets by ~2.9mn bpd for July, highlighting consistent production problems amongst some members.
• Elsewhere, preliminary data from analytics firm Kpler has shown Russian crude exports for Aug so far remaining above levels observed prior to the Russia-Ukraine war for a fifth straight month, pointing to the limited impact of Western sanctions so far. Further measures are however expected to kick in in H2 ‘22 (e.g. EU’s ban on Russian oil and shipping insurance), potentially affecting >3mn bpd in current crude exports.
• Little by way of fresh, discernible progress has been made towards a U.S.-Iran nuclear deal, with the Biden administration yet to formally comment on the EU’s “final draft”.