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Crude prices slipped back lower today from two-month highs, testing back into the range of the last couple of days after rallying hard on increasing geopolitical tensions.

A series of drone attacks last week on Russian oil infrastructure by Ukraine, combined with escalating tensions between Iran-backed Hezbollah and Israel have buoyed crude prices, Claudio Galimberti, director of global market analysis at Rystad Energy, said in a note.

Today's decline (perhaps driven by weaker sentiment and confidence data) did not appear to change the trend, but tomorrow's official inventory data (which we get a hint at tonight from, API) may change things…

API

• Crude +914k (-200k exp)

• Cushing -350k

• Gasoline +3.84mm (-900k exp) – biggest build since Jan 2024

• Distillates -1.18mm

Crude stocks rose modestly last week, against expectations of a small draw but gasoline stocks surged according to API…

Source: Bloomberg

WTI was trading around be $80.80 ahead of the API data and dipped on the crude build before coming back…

Source: Bloomberg

Finally, despite the decline and the builds, there are signs of strong summer demand in the Northern Hemisphere (after earlier jitters over a shaky start to the U.S. summer driving season, which runs from Memorial Day to Labor Day).

Galimberti said expectations for a summer surge in fuel demand have been aided by strong growth in aviation. Jet fuel is expected to see an increase in demand of 550,000 barrels a day, according to Rystad, after a 1.2 million barrel-a-day jump last year.

Analysts at JPMorgan Chase & Co. on Tuesday maintained a forecast that Brent would average $84 a barrel in the third quarter and hit $90 by August or September, “underpinned by our expectations that global demand will outpace supply in the summer quarter.”

Meanwhile, analysts at Macquarie revised their Brent third-quarter forecast up to $86 per barrel, from $83, on projections of rising demand.