Oil prices are modestly higher ahead of this morning’s official energy inventory and supply data, but have come dramatically back off the overnight spike highs driven by CNN headlines suggesting Israel is ready to strike Iranian nuclear enriuchment sites.

“Either the impact on the oil market in case of an attack is assumed to be low, or the probability for an attack is assumed to be low,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. 

Wednesday’s gain “is not much when we are talking bombs in the Middle East major oil producing region.”

Overnight also saw API report another sizable crude inventory build, while products drewdown (again)…

API

Crude +2.5mm

Cushing -443k

Gasoline -3.24mm

Distillates -1.4mm

DOE

Crude +1.33mm

Cushing -457k

Gasoline +816k – biggest build since January

Distillates +579k

A smaller than expected crude build was offset by an unexpected build in Gasoline stocks according to the official DOE data…

Source: Bloomberg

Including a 843k barrel addition to SPR, total US crude stocks rose for the second week in a row…

Source: Bloomberg

US Crude production was up very modestly last week – hovering just below record highs – while the rig count continues to reject Trump’s ‘Drill, baby, drill’ narrative…

Source: Bloomberg

Geopolitical concerns have for now overshadowed expectations of looser balances heading into the second half of the year, as OPEC and its allies bring back barrels to the market. 

Source: Bloomberg

US shale oil output hasn’t peaked and can still expand, but not if prices are near $50 a barrel, ConocoPhillips’ chief executive officer said Tuesday.

Meanwhile, Trump will not be best pleased if geopolitical tensions raise the price of oil and wreck his inflation-busting drill-baby-drill hopes of declining pump prices for the average American.