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Oil prices extended gains today with WTI up near $74 as a disagreement between Iraq and Kurdish officials curtailed exports and fears of a banking meltdown receded somewhat.

A recent international ruling has resulted in at least a temporary halt of Kurdish oil exports through Turkey and the Ceyhan pipeline network, said Robbie Fraser, manager, of global research & analytics at Schneider Electric, in a daily note. That's impacting around 400,000 barrels per day or around 0.4% to 0.5% of global supply, he said.

"The ruling determined Iraq's semi-autonomous Kurdish region could not export crude directly, but most do so with Baghdad's approval and under the authority of the Iraqi central government," said Fraser.

In the short term, all eyes will be back on crude stocks (after last week's modest build while products saw big draws).

API

• Crude -6.076mm (+300k exp) - biggest draw since 11/25/22
• Cushing -2.388mm - biggest draw since Feb 2022
• Gasoline -5.891mm (-1.6mm exp)
• Distillates +548k (-1.1mm exp)

Against expectations of another small build, API reported a significant crude draw of over 6mm barrels. Cushing saw stocks fall and Gasoline inventories also drew down significantly...

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Source: Bloomberg

WTI was hovering around $73.40 ahead of the API print and is higher after...

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Finally, as Bloomberg notes, while oil has rallied from recent lows as the banking sector stabilizes, it remains on track for a fifth monthly decline amid concerns over a potential US recession and resilient Russian energy flows. Most market watchers are still betting that China’s recovery will accelerate and boost prices later this year as demand rebounds.

Meanwhile, OPEC+ is showing no signs of adjusting oil production when it meets next week, staying the course amid turbulence in financial markets, delegates said. 

We also note that there is the 'Biden Call' sitting under the market as at some point he will have to start refilling the SPR.

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