Flip-flopping headlines from OPEC+ leaks and China COVID restrictions prompted a volatile day in crude markets today but WTI ended higher.

OPEC+ does “not like contango and that is what has raised market expectations of deeper cuts,” Amrita Sen, chief oil analyst at consultant Energy Aspects, said in a Bloomberg TV interview.

“I’m not ruling out deeper cuts -- that’s of course on the table -- but I would say that’s not our base case.”

Earlier in the session, prices rallied above $79 a barrel after Beijing said it would bolster vaccination among seniors then prices briefly flirted with losses after Reuters reported that the production cartel would stick with its current oil-output policy.

API

• Crude -7.85mm (-2.49mm exp) - biggest draw since April 2022
• Cushing -150k
• Gasoline +2.85mm
• Distillates +4.01mm

This is the 3rd sizable crude draw in a row...and the 3rd straight week of sizable product builds...

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Source: Bloomberg

WTI was hovering around $78.50 ahead of the API print and extended gains after...

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Notably, the shape of the futures curve has flipped in recent weeks, continuing to signal an oversupplied market.

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Source: Bloomberg

That is the largest contango since 2020.

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