Tight Supply Keeps Dips Supported

Brent crude is modestly up on NY closing levels, last around $92.70/bbl (+0.30% for the session so far). We remain below overnight highs, near $95/bbl, with the simple 50-day MA also at 93.21/bbl likely offering some resistance. Some support is evident ahead of the $92/bbl though, while beyond that is the $89-$90//bbl lows from earlier in the week. For WTI, we were last just under $85/bbl.

• Overall supply conditions remain tight. The Brent prompt spread is back to +1.88, versus +1.48 this time last week.
• US refiner Phillips 66 also warned that 3 crude suppliers are at risk of breaching oil supply contracts for October. While Goldman Sachs analysts don't expect a large impact from further incremental SPR sales. The SPR is also likely to restock if oil prices reach the $67-72/bbl range (or lower).
• On the demand side, yesterday's spike in oil, started by reports China is considering lowering the quarantine period for international arrivals, hasn't had great follow through momentum.
• Higher frequency indicators of China domestic demand conditions (road and subway traffic volumes) remain off recent highs. We may also get China Q3 GDP released next week, after this week's delay. Note also US Q3 GDP is also out next week.