All things considered, the action in the crude oil market to start the trading week has been impressive as reports of slackening Chinese crude oil import activity ahead and ongoing fears of a return to lockdown in certain areas of the US could have prompted aggressive demand destruction selling. Unfortunately for the bull camp US energy demand concerns continue to rise with state governments rolling back activity again. However, it is difficult to discount the potential for further “improvement” in Chinese oil demand as China saw favorable Manufacturing and Non-manufacturing PMI readings overnight.
Increasing seasonal demand is making it difficult for the bear camp to attack the short covering rally. It is also possible that a veritable avalanche of dialogue projecting even more aggressive shutdowns of drilling activity (one estimate projected oil and gas investments to drop by nearly 23% this year Fitch) and signs that Chinese domestic demand for LNG is recovering along with their economy is scaring some would-be sellers.
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