Oil prices ended modestly lower on the day - about the only asset that didn't get destroyed - as chatter that the Biden admin will bid crude at $80/bbl to refill the SPR sent prices rebounding higher after they were crushed by the hawkish shift from hot CPI.

“It may not be a catalyst for $100 crude but does offer a buffer to the downside risk that the market is worrying about,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management.

Separately, US Secretary of State Antony Blinken said it was “unlikely” the US and Iran would reach a new nuclear deal anytime soon, echoing recent comments from France, Germany and the UK, and pushing back the likelihood of any substantial increase in Iranian oil shipments in the near term.

But for now, any hints that last week's unexpectedly large build in crude stocks continues have all eyes focused on API tonight ahead of tomorrow's official data.

API

• Crude +6.035mm (-200k exp)

• Cushing +101k

• Gasoline -3.23mm

• Distillates +1.75mm

For the second week in a row, if API data is confirmed tomorrow, US Crude inventories built dramatically...

(Click on image to enlarge)

Source: Bloomberg

WTI was hovering around $87.50 ahead of the API print and remained stable after the crude build...

(Click on image to enlarge)

“We do not expect a sustained rally soon, but estimate the risk/reward outlook has improved again,” Morgan Stanley analysts including Martijn Rats and Amy Sergeant said in a note.

“The oil market’s structural outlook remains one of tightness, but for now, this is offset by cyclical demand headwinds.”

With a floor under the price of WTI though - thank you, Mr.Biden - we suspect the bid will remain.

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