Oil demand is being threatened by extended lockdowns in China, inflation-driven interest rate hikes, and fears of Europe potentially dropping into recession if the Russia-Ukraine war continues to escalate. Ebbing inventories, with the US poised to see stock draws across the crude/product spectrum, contributed some support but failed to halt ICE Brent futures from falling towards the $100 per barrel mark, OilPrice reports.  

A new wave of COVID lockdowns in China is sparking concern over oil demand stability. In response to the growing fear of crumbling demand in China, Saudi Aramco is reducing its oil export prices for the first time in four months. China’s latest series of lockdowns has had the whole business world worried about the future. In Europe, close to 60 percent of businesses with a presence in China were cutting their 2022 growth projections, with more than half of the cuts at between 6 and 15 percent. Business sentiment among Chinese businesses also suffered from the lockdowns, according to local surveys. Currently, the effect of the lockdowns on China’s oil demand is pretty much the only bearish factor for oil. https://oilprice.com/Energy/Crude-Oil/Chinas-COVID-Lockdowns-Force-Aramco-To-Slash-Oil-Export-Prices.html

JP Morgan revised its forecast for oil demand this year down by 1 million barrels daily. JP Morgan sees total oil demand averaging 100 million bpd in 2022, 400,000 bpd below 2019 levels. JP Morgan revised its forecast for oil demand this year down by 1 million barrels daily, citing high oil prices. Per a report by Reuters, the bank meanwhile left unchanged its price forecast for Brent crude at $114 per barrel during the current quarter, and $104 per barrel for the year. However, if another million barrels daily disappear from global supply, the bank added, Brent crude could add another $18 to $35 per barrel above its price target. BP’s CEO Bernard Looney said earlier this week Russia had already lost 1 million bpd in output and could lose another one this month. “We now see total oil demand averaging 100 million bpd, 400,000 bpd below 2019 levels,” the bank’s analysts also said. https://oilprice.com/Energy/Crude-Oil/JPMorgan-Slashes-Demand-Outlook-Amid-Soaring-Oil-Prices.html

Russian crude exports have reached post-pandemic highs despite falling production rates, with robust buying coming on the back of heavily discounted barrels. The main export grade of Russia, the medium sour Urals, has been trading at discounts below -$30 per barrel to Dated Brent, becoming arguably the cheapest major crude stream on the market. Crude exports out of Russia’s terminals averaged 5.03 million b/d in April, spearheaded by a vast uptick in Indian buying, quadrupling to 900,000 b/d compared to February numbers, OilPrice said.