If Inventories down, then buy oil at the fastest pace in 2 months. That appears to be the algo logic as talking heads additionally blame Saudi airstrikes on Yemen for the over 6% surge in WTI in the last 2 days. However, as crude nears $62 (6 month highs) once again, we note that not only Saudi oil production just hit a new record high, but US production hit a new cycle high last week (DOE data today), and this is happening as China's energy demand grows at the slowest pace since 1998.

So slowing demand growth and soaring production...  means prices are ripping.

Click on picture to enlarge

This is happening as Saudi Oil Production hits a record high:

Saudi Arabia increased its oil production to a fresh record in May as the kingdom stepped up its attempt to win back more customers and as Opec forecasts supply outside the group to fall in the second half of this year.

The Kingdom's output in May reached 10.33m barrels a day, according to numbers submitted by Riyadh to Opec, confirming the widely held view that Saudi Arabia's production is heading higher, Anjli Raval, FT oil and gas correspondent writes.

Saudi's oil output was 10.31m b/d in April, Riyadh told Opec.

While on the demand front, BP reports that demand growth was the lowest of the 21st century aside from the 2008 financial crisis:

Global energy consumption growth slowed markedly last year to the lowest level since the late 1990s, apart from around the time of the financial crisis in 2008, BP said on Wednesday.

Significant growth in shale oil and gas output put the US ahead of Saudi Arabia as the world’s largest oil producer and ahead of Russia as the world’s biggest producer of oil and gas, the energy giant said on release of its annual Statistical Review of World Energy.

Global primary energy demand growth slowed to 0.9% with Chinese growth at its lowest level since 1998 as its economy was rebalanced away from energy intensive sectors, BP said. China remained, however, the world’s largest market for energy.

Global oil consumption growth was slower last year at 0.8m bbl/day compared with 1.4m bbl/day in 2013. BP said that countries outside the OECD accounted for all oil consumption growth even though China consumption growth was below average.

Natural gas consumption growth was just 0.4%, well below the 10-year average of 2.4%, the review shows. EU natural gas consumption was down 11.6% mainly due, it is thought, to mild winter weather.

Global natural gas production growth was 1.6% in 2014, below the 10-year average of 2.5%. US natural gas production was up 6.1% while production in Russia was down 4.3% and in the Netherlands down 18.7%.

China’s slowdown and the rebalancing of its economy meant that its coal consumption growth stalled in 2014 compared to 2% in 2013 and an average of 6% over the past 10 years. The BP data are based on the energy content of coal. Global coal consumption growth was 0.4% compared with a 10-year average of 2.9%.

BP’s data show that China’s slower economic growth helped reduce the growth in global carbon dioxide (CO2) emissions by 0.5%, to the lowest level since 1998 apart from at the time of the global financial crisis.