Crude Finishes Higher Despite Debt-Ceiling Jitters

After some volatility, oil prices rose further on Wednesday by around 2% after rising over 2% the previous day. It was supported by a large US inventory drawdown and a warning to short sellers the previous day from the Saudi energy minister.

• WTI is approaching its 50-day simple moving average and currently trading around $74.20/bbl up from the intraday low of $73.13. It has tested $74.41, the 50-day EMA, after which lies $76.74, the April 28 high. Brent is about $78.36, close to its intraday high of $78.66, which cleared the 50-day EMA of $78.56. The next level to watch is $82.88, the April 25 high.
• Volatility in the market appeared to be driven by US debt-ceiling concerns, which drove US yields higher. But as they softened following the Fed minutes, crude rallied again.
• EIA data showed a 12.5mn drop in US crude stocks, the largest since November, in the latest week after a 5.0mn barrel build. Including the SPR the drawdown was 14.1mn, the largest weekly decline since September 2016. Implied gasoline demand also rose 6% on the week, as retailers stock up ahead of the Memorial Day long weekend.
• Fires in Alberta, Canada are abating and oil & gas output is being restored.