Off Tuesday’s Lows; U.S. Inventories In Focus

WTI and Brent are ~$0.90 firmer apiece, working away from their respective one-week lows observed on Tuesday, but ultimately coming nowhere near to unwinding yesterday’s losses at writing.

• To recap, both benchmarks closed >$5 lower apiece on Tuesday, falling by the most in a month amidst an easing in supply-related worry from their extremes, with hawkish language from Fed and ECB officials fuelling concerns re: economic slowdowns on tighter central bank policy.
• To elaborate on the former, worry surrounding a disruption to Iraqi oil supplies (OPEC’s second largest producer) has eased, with officials stating on Tuesday that operations have been unaffected. Elsewhere, fresh unrest in Libya has also seen no impact on crude production so far.
• U.S. API inventory estimates on Tuesday saw reports point to a relatively small, surprise build in crude stockpiles (coming after large drawdowns were reported over past two weeks), with declines observed in gasoline, distillate, and Cushing Hub stocks.
• Looking ahead, EIA inventory estimates are due, with BBG median estimates calling for a modest decline in crude stockpiles. A note that average diesel prices in the U.S. have returned to above $5/gallon, pointing to possible further tightness in already-low distillate inventories.