Higher In Asia As China Re-Opening Rolls On; WTI Eyes $120

WTI and Brent are ~$0.60 higher, operating around session highs at typing. Both benchmarks operate a little under highs seen on Monday, with China’s continued lifting of COVID-induced lockdowns helping to boost optimism re: increased energy demand in the coming weeks.

• To elaborate, the easing of COVID-related measures in Beijing and Shanghai have continued, with the latter reporting that its container port is now operating at ~95% of “normal levels”. Traffic bans within both cities have been lifted - as have dining-in restrictions, while nationwide, travel restrictions (such as on “non-essential” overseas travel) are also widely expected to be lifted at some point, However, focus has shifted to rising case counts in other areas - particularly in China’s Inner Mongolia (69 cases for Monday out of 124 nationwide) and Dandang City (32 cases).
• Several banks have upgraded their forecast for major oil benchmarks, with many citing expectations for Russian crude output to decline further in the coming months, mixing with a rebound in the outlook for Chinese oil demand.

• Turning to the U.S., debate re: demand destruction continues to run hot as an estimated (by the AAA) >20% of gas stations nationwide are charging >$5/gallon for gasoline (the pre-’22 record was $4.11/gallon).
• Fuel subsidies/tax cuts across several countries (such as South Africa, Indonesia, and Mexico) are however helping to tamp down wider demand destruction worry, although the fiscal cost of such measures have raised questions over their sustainability.