Oil prices are higher today following relatively positive news from China (easing some of its COVID quarantine restrictions), Macron-inspired doubts over the ability of Saudi Arabia and the United Arab Emirates to significantly boost output, and unrest in Ecuador and Libya helped lift prices.

“We’re in the crunch period, it’s hard to see any meaningful price relief for crude,” said John Kilduff.

There’s a lot of strength with China relaxing its Covid restrictions and starting its independent refiners, “we’re going to have another chunk of demand for crude oil,” as China relaxes its Covid-19 restrictions.

With no EIA data released last week due to a "systems issue" (they have issued a statement confirming that the data - and the newest data - will both be released tomorrow), the only guidance we have for now on the past week's inventory changes is from API...

API (last week)

• Crude +5.607mm

• Cushing -390k

• Gasoline +1.216mm - first build since March

• Distillates -1.656mm

API (this week)

• Crude -3.799mm

• Cushing -650k

• Gasoline +2.852mm

• Distillates +2.613mm

Crude stocks unexpectedly fell last week, almost erasing the major build from the week before (according to API). Gasoline stocks rose for the second straight week.

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Source: Bloomberg

WTI was hovering around $111.75 and pushed up to $112 after the unexpected crude draw...

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Finally, we note that the tight supply situation in oil (especially European) is revealing itself in the WTI-Brent spread, growing to $6.19, the widest in almost three months.

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“European demand will remain robust, especially as natural gas supplies run out, while the North American demand for crude is weakening,” said Ed Moya, senior market analyst at Oanda.

This is not good news for President Biden as prices are rising...

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And his ratings are hitting record lows.