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Oil prices have rebounded strongly overnight on the heels of the BoJ's big dovish 'fold', which trumped the across-the-board inventory builds reported by API.

Additionally, traders are also closely monitoring geopolitical risks. In the Middle East, nations are bracing for a potential Iranian attack on Israel as payback for assassinations of Hezbollah and Hamas leaders. Ukrainian troops also launched a rare cross-border attack into Russia.

But for now, the tactical trade will be dependent on the official inventory data.

API

• Crude +0.18mm

• Cushing +1.07mm

• Gasoline +3.31mm

• Distillates +1.22mm

DOE

• Crude -3.728mm (-800k exp)

• Cushing +579k

• Gasoline +1.34mm

• Distillates +949k

Contrary to API's reported build, the official DOE data shows Crude stocks falling for the sixth straight week (the longest streak of inventory draws since January 2022)…

Source: Bloomberg

Total US Crude stocks fell to their lowest since February…

Source: Bloomberg

The Biden admin added 736k barrels to the SPR (the biggest weekly addition since June)…

Source: Bloomberg

US crude production rose to a new record high last week, as the rig count continues to decline…

Source: Bloomberg

WTI is holding gains after the DOE data…

Oil still faces headwinds from faltering demand in China and the US, and the potential addition of supply from the OPEC+ alliance from next quarter.

An escalation of hostilities in the Middle East may spark further price gains, but a disruption to crude output from the region is needed for a sustained increase.