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Crude prices continue to tread water above $70 (WTI) this morning (holding Monday's gains on potential sanctions on Russian oil), drifting modestly lower aftr API reported a large crude build overnight ahead of new supply coming this month as OPEC+ begins to unwind 2.2-million barrels per day of production cuts.

However the new supply is being offset with tightened U.S. sanctions on Iran and Venezuela, while Trump this week threatened to impose secondary tariffs on U.S. imports from countries buying Russian oil.

DOE

• Crude +6.165mm

• Cushing +2.373mm – biggest build since Jan 2023

• Gasoline -1.551mm

• Distillates +264k

The official data confirmed API's report that Crude inventories saw a large build last week. Stocks at the Cushing hub also soared (most since Jan 2023) as Gasoline stocks fell for the 5th straight week…

Source: Bloomberg

Including a 285k barrel addition to the SPR, last week saw the largest total crude inventory build since the last week of January…

Source: Bloomberg

US Crude production was steady at record highs as Trump's 'drill baby drill' plan appears to be working with the rig count rising notably…

Source: Bloomberg

WTI is holding above $71 for now (near 5-week highs)…

Source: Bloomberg

Finally, we note that the tariffs add to a deluge of conflicting drivers from energy markets since Trump came into office. Sanctions threaten to curb supply from Russia and Iran, even as a production boost by OPEC and its allies starting this month exacerbates concerns a glut is looming later this year.

“We expect a wait-and-see stance in the oil market today until more clarity emerges on Trump’s tariff plans,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “That said, there is a risk that the oil price may decline today, driven by concerns that tariffs will significantly hinder growth.”

Oil prices continue to hover near five-wek highs after the Trump administration threatened to impose steep tariffs of 25% to 50% on buyers of Russian crude, Rystad Energy reported in an analysis piece.. The move, aimed at pressuring Moscow into a ceasefire with Ukraine, added a new layer of geopolitical uncertainty to the market.

'The market is still digesting what these newly proposed tariffs mean for peace negotiations,' said Janiv Shah, Rystad’s vice president of oil.

Shah noted that if the tariff strategy proves effective in encouraging a Russia-Ukraine truce, the measures could be short-lived. However, he warned the tariffs could have diverging effects: “bullish for crude oil and bearish for products.”