Prices Hold Gains On Better Risk Sentiment Despite Strong Stock Build

Oil prices rallied on Wednesday driven by improved risk sentiment as it seems that a US debt-ceiling deal will be made by the end of the weekend. WTI rose 2.6% reaching a high of $73.26/bbl after a low of $70.04, despite a large rise in US crude inventories. It has started the APAC session around $72.80. Brent rose 2.5% and is currently $76.96, close to yesterday’s high of $77.31. The USD index is 0.3% higher.

• WTI is moving towards resistance at $73.93, the April 28 low, after having trended lower for some time. Brent broke resistance at $77.15 on Wednesday, which opens up $77.60, the May 10 high.
• EIA reported that US crude inventories rose 1.1% or 5.04mn barrels in the latest week with distillate up 80k but gasoline down 1.38mn due to strong demand. US refining margins have risen to their strongest in around a month as gasoline demand firms. Diesel margins are also higher on rising exports to Europe.
• Russian oil shipments have remained strong despite announcing it would reduce output. It has found buyers in Asia (especially China and India) in the face of western sanctions and has been taking market share from other OPEC members, according to Bloomberg.
• Canadian output continues to be impacted by wildfires. Bloomberg is reporting that around 300kbd are currently impacted but 2.7mbd in north eastern Alberta could be threatened as the fire risk in the region is now classified as “very high” or “extreme”.