Supply Outlook Coming Back Into Focus

Brent crude is just below $89/bbl currently, modestly off NY highs, unwinding only 0.4% of the +3.5% rally yesterday. We haven't been able to sustain earlier gains beyond $89.50/bb. WTI is close to $82/bbl, displaying a similar trajectory.

• Crude is still moving with broader risk appetite to some degree. Today's rebound in the USD has no doubt weighed on sentiment.
• Still, the supply backdrop is likely to remain the main driver of sentiment as we push into next week. The energy conflict in the EU is unlikely to improve in the near term, which should continue to see some spill over to oil prices.
• Next week's OPEC+ meeting (October 5th) could deliver fresh production cuts as well. A number of sell-side analysts are suggesting as much.
• Overnight, we also had a surprise drawdown in both US crude and gasoline inventories, which suggests the demand backdrop is not as soft as feared.
• Tomorrow China PMIs print, which will also be eyed to gauge China's recovery/commodity demand outlook.