Weaker As COVID In China, IEA Release In Focus

WTI and Brent are -$2.30 apiece at writing, operating around the bottom of Friday’s range as energy demand worry re: China’s ongoing COVID outbreak remains elevated, mixing with lingering pressure from the International Energy Agency’s (IEA) planned release of crude from the strategic reserves of member countries.

• To elaborate on the former, the Chinese city of Shanghai reported a little over 26K cases (asymptomatic and symptomatic) for Apr 10, notching another record high. Elsewhere, the authorities announced mass testing and limited restrictions on indoor activities to the city of Guangzhou (pop. ~18mn, Guangzhou port ranked top 5 globally by cargo volume) over the weekend, with a handful of cases reported for Friday. Officials have warned that the likelihood of a wider outbreak in Guangzhou is “extremely high”, flagging the city’s dense population, and the high transmissibility of the Omicron variant.

• To recap the IEA’s plans announced last week, the group will release ~2mn bpd in crude supplies for two months (~120mn bbls), followed by ~1mn bpd from the U.S. for the following four months (~120 mn bbls).
• Elsewhere, virtually no progress has been made towards an Iranian nuclear deal, with well-documented sticking points between the U.S. and Iran remaining unresolved, particularly on the issue of the U.S. keeping Iran’s Quds Force on a designated list of terror groups.