Holding On To Recent Gains Amidst Supply Worry

WTI is ~-$0.20 and Brent is ~-$0.50, with both benchmarks keeping to tight <$1 ranges so far, consolidating a little below their respective Monday’s peaks at writing.

• To recap, WTI and Brent closed ~$4 firmer apiece on Monday, aided by an escalation in supply-related worry particularly around Libyan political unrest and potential OPEC+ supply cuts.
• On the former, Libya stated on Monday that crude production remains >1.2mn bpd despite a recent spike in politically-related violence.
• Looking to OPEC+, several members such as Iraq, Venezuela, and Kazakhstan have signalled support for future production cuts, with participants eyeing the group’s next meeting on Sep 5.
• Elsewhere, International Energy Agency (IEA) Chief Birol pointed out that western sanctions are likely to crimp Russian production later this year, even as Russian crude exports have declined by less than expected so far.
• Dr. Birol also observed that the ongoing release of crude from the strategic reserves of IEA members is due to expire, although further releases may be discussed, citing a “substantial amount of stocks” held by members.
• The prompt spreads for WTI and Brent have risen in recent sessions to ~$0.85 and ~$1.95 respectively, pointing to an uptick in worry re: supply tightness.