Physical grades weaken

Brent futures prices were stable at 55.5 $/b for the prompt future contract amid growing concerns over new lockdowns, as Hong Kong declared a 2-day lockdown, while France will likely implement one by the end of the week. The evolution of the pandemic in China is also closely monitored, with strong actions from the Chinese authorities despite the still modest spread of the virus. Both Libyan and Nigerian exports will return to normal after two incidents. Libyan exports were reportedly down by 20%, at about 200 kb/d.  Finally, the latest official selling prices from and loading programs from West African countries are showing further weakness, pointing towards weaker physical price for Asia’s marginal market. As prices consolidated around 55 $/b, US producers managed to ramp up rig activity this week, in an effort to rebuild the DUC backlog.