Oil prices continued their recent rally this morning as traders hiked its risk premium as Israeli PM Netanyahu arrived in Washington to pressure President Trump to take a hard line in talks with Iran, even as the API report overnight showed a huge rise in US inventories last week.
"Oil trades firmer, with Brent back above USD 69 as Middle East tensions sustain a modest risk premium. The US signaled it is considering seizing tankers carrying Iranian oil, while President Trump threatened to deploy another aircraft carrier should nuclear talks with Iran fail," Saxo Bank noted.
The threats of violence in the Persian Gulf - a region that supplies about a fifth of the world's daily oil consumption - comes even as signs supply remains well ahead of demand.
"While rhetoric remains belligerent at times, there are no signs, at least for now, of escalation, and the U.S. President believes that Iran will ultimately want to strike a deal on its nuclear missile programme," PVM Oil Associates analyst Tamas Varga said in a note.
If API's huge build is confirmed by the official data, the battle between geopolitical risk premia and over-supply gets harder (but admittedly this is very much affected by the freezing storms).
Expect another volatile week of EIA data with“significant winter freeze noise,”Macquarie energy strategist Walt Chancellor said referring to last month’s storm.
Crude +8.53mm (-400k exp) - biggest build since Jan 2025
The official data confirmed a large crude build (largest since Jan 2025), but smaller than feared from API. Gasoline stocks rose for the 13th straight week whileDistillates saw stocks fall for the second week...
This build pushed total crude stocks up to their highest since June...
US Crude production rebounded as expected from its winter storm plunge...
Source: ZeroHedge News
