Crude Rallies On Stock Drawdown & US CPI

Crude finished stronger on Wednesday driven by the moderately lower-than-expected US April CPI and larger-than-expected US inventory drawdown. The former improves the demand outlook as rate cuts may not be pushed back any further and the latter shows tighter supply. The USD index fell 0.6% on lower yields.

• WTI rose 1.1% to $78.87/bbl, close to the intraday high of $78.92. It has started today around $78.85. It is now up 0.87% this week but still down 3.7% in May to date. A bearish theme remains with initial support at $76.89, May 8 low. Resistance is at $80.22, 20-day EMA, with the bull trigger at $86.97.
• Brent is up 0.6% to $82.91/bbl to be up 0.1% this week but down 4% on the month. The benchmark fell to $81.05 before rallying towards $83. Initial resistance is at $84.66 with the bull trigger at $91.18. Initial support is at $81.71, May 8 low.
• EIA reported a crude drawdown of 2.51mn barrels last week with gasoline down 235k and distillate -45k. Gasoline demand rose 78kbd. Refinery utilisation rose 1.9pp to 90.4%.
• The IEA released its monthly report and has reduced its demand expectations by 140kbd for this year due to downward revisions to Q1 from slower growth and milder European weather.