Crude Futures Dip Slightly After Rally

Oil is slightly lower in Asia-Pac trade on Thursday, but still holding the majority of its gains from Wednesday. WTI is down $0.28 from settlement levels at $70.82/bbl while Brent is down $0.35 at $71.88. Crude is weighed on by reports that China has been dipping into its strategic reserve to supply its refiners in an attempt to stem price appreciation amid warnings of elevated commodity prices stoking inflation. The bounce yesterday accelerated on a bullish set of numbers from the Weekly DoE Report. Markets focused on the far larger than expected draw in distillates inventories, which saw stockpiles drop around 1.3mln bbls - the fastest pace of decline in months. Analysts had expected a build of 1.1mln bbls over the period. Traders also shrugged off the bigger-than-expected build in headline reserves, with isolated West Coast supply being largely responsible a bullish candle pattern on from Monday/Tuesday is still in place, which could target first resistance at $71.40 (weekly high) and $72.48.