Oil prices are higher this morning (extending its 8%-plus surge of the last three days) as Middle East tensions simmer and global stockpiles shrink at a record pace.

WTI topped $103 and Brent crude traded near $108 a barrel, erasing its retreat earlier on Wednesday, after the IEA said global observed oil inventories declined at a rate of about 4 million barrels a day in March and April.

Saudi Arabia told OPEC that its output sank to the lowest level since 1990.

“With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period,” the Paris-based IEA said in its Oil Market Report.

The market will remain “severely undersupplied” until October even if the conflict ends next month, the agency said.

For obvious reasons, this morning’s official inventory and supply data (for the US) is now top of mind.

API

Crude -2.2mm

Cushing

Gasoline +502k

Distillates -319k

DOE

Crude -4.3mm (-2.5mm exp)

Cushing -1.7mm

Gasoline -4.08mm – 13th weekly draw in a row

Distillates +190k – first build in 7 weeks

Crude stocks saw a bigger than expected drawdown last week (the third week in a row) as Cushing inventories drop and while Distillates saw a small build, Gasoline stocks plunged… again…

Source: Bloomberg

The drawdowns from the Strategic Petroleum Reserve continue to accelerate. The 8.6mm barrel draw was the largest on record…

Source: Bloomberg

US crude production jumped last week…

Source: Bloomberg

Crude exports jumped back up to near the 6 million barrel a day mark, rising 742,000 barrels to around 5.5 million barrels a day. Anything above 4 million barrels a day is generally considered robust demand and in recent weeks the US sets its all-time record for crude exports as the Iran war disrupts flows globally. 

Imports of Venezuelan crude soared to 598,000 barrels a day, the highest since early 2019 when the US first imposed a de facto ban on oil imports from the country. 

Refinery runs bounced back in a big way and are now just shy of levels seen at the same time last year as maintenance season wraps up.

Valero Port Arthur was finally able to restart its largest crude unit, following a end-March fire, helping to bolster crude processing in the region. 

WTI extended gains, topping $103.50 this morning, as Martijn Rats, commodities strategist at Morgan Stanley, told clients in a Monday note: “That this is the largest oil supply disruption in the history of the oil market is neither an exaggeration nor controversial.”

Morgan Stanley forecasts the market will lose another billion barrels over the course of 2026 due to the time required to restart oilfields, repair refineries and reposition the tanker fleet’

“We expect this destocking environment to continue over the next number of months and ultimately drive a restocking phenomenon longer-term,” Plains All American Pipeline LP Chief Executive Officer Willie Chiang said on an earnings call Friday.