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Oil prices extended losses overnight from yesterday afternoon, but bounced back into the green this morning after WTI found support at $89 after Goldman upgraded its forecast.

After last week's big product builds, all eyes will be on any signs of demand-destruction. But, more ominously, the decline in Cushing stocks is top of mind for many…

API

• Crude -5.25mm (-1.00mm exp)

• Cushing -2.56mm

• Gasoline +732k (+500k exp)

• Distillates -258k (-200k exp)

DOE

• Crude -2.14mm (-1.00mm exp)

• Cushing -2.06mm

• Gasoline -831k (+500k exp)

• Distillates -2.87mm (-200k exp) – biggest draw since May

The official data showed inventory draws across all the cohorts with a smaller crude drop than API rpeorted . Cushing saw stocks plunge for the 11th week of the last 12…

Source: Bloomberg

The 'adjustment factor' is back and surging…

Source: Bloomberg

With the Biden admin claiming that draining the SPR is 'back on the table', they added 600k barrels to it last week…

Source: Bloomberg

Traders are starting to worry that Cushing stocks are nearing 'tank bottoms'…

Source: Bloomberg

US crude production was flat at pre-COVID-lockdown highs…

Source: Bloomberg

WTI rallied back up to hover around $90.50 ahead of the official data and held around there after…

Even one of the market’s stauncher bears, Citigroup Inc.’s Ed Morse, said that geopolitics plus technical trading “could push oil over $100 for a short while.”

However, a well-supplied market – from producers outside OPEC – should mean that “$90 prices look unsustainable,” he added.

And none of this is good news for The White House or The Eccles Building as gas prices are set to keep soaring…

Source: Bloomberg

…a problem for Biden – as Americans see higher pump prices and call 'bullshit' on his IRA claims; and for Powell – who knows what is coming next is a re-ignition of inflation, which will keep them higher for longer.

Finally, as a reminder, history shows that surging energy costs usually play a role in tipping the U.S. into recession… and demand is starting to be impacted…

Source: Bloomberg

Meanwhile, Russia is killing it…

When will 'The West' start fighting back against the price-cap-deniers? (Like Trudeau did yesterday… until absolutely no one else joined him in condemning India).