Higher In Asia As Demand Worry Eases

WTI and Brent are ~$1.60 firmer apiece, building on their respective ~$2 higher closes on Wednesday, with Brent sitting just shy of fresh one-week highs.

• To recap Wednesday’s price action, crude hit session highs after the EIA data pointed to a significantly larger-than-expected drawdown in crude stockpiles, corroborating with the decline reported through API estimates on Tuesday. Gasoline stockpiles fell by more than expected while there was a surprise drawdown in distillate stockpiles, with a build observed in Cushing hub stocks.
• The large draw in crude inventories comes amidst record high U.S. exports, aided by the previously-flagged widening of the WTI-Brent spread. Domestic gasoline demand was also reported to have surged by 8.5% after two weeks of declines, likely easing recent expectations of demand destruction.
• Wednesday’s FOMC also provided some relief to crude as the prospect of a slower rate hike path suggested by Fed Chair Powell eased wider worry re: a Fed-led slowdown, with a bid in equities observed as well.
• Looking ahead, U.S. Q2 Advance GDP later will take focus, with the BBG median currently looking for a 0.5% expansion. Note that several individual forecast upgrades were made on Wednesday on the back of fresh economic data, with the Atlanta Fed’s Q2 GDPNow real GDP estimate moderating to -1.2% as well (from -1.8% on Jul 26).