HG MARKETS:

President Trump recently clarified that he has no plans to dismiss Federal Reserve Chair Jerome Powell, helping to ease investor concerns about potential political interference in monetary policy. This reassurance contributed to a more stable outlook in financial markets, including commodities like oil. In addition to this, remarks from both Trump and Treasury Secretary Scott Bessent suggested a possible softening of the ongoing trade tensions with China. These developments have provided a more optimistic backdrop for global economic growth and, in turn, oil demand.

The easing of geopolitical and economic uncertainty has come at a time when the physical oil market is showing signs of tightness. Market participants are closely watching time spreads, which have continued to strengthen a clear signal that demand for prompt crude supplies is rising. This strengthening in near-term pricing over future delivery points to a constrained supply situation, particularly in key delivery hubs. Such signals are encouraging for those betting on further oil price increases in the short term. The tightening is seen as a foundation for continued market support.

On the inventory front, data released by the American Petroleum Institute (API) overnight offered bullish insights for the oil market. US crude stockpiles fell significantly by 4.57 million barrels last week, signaling strong consumption or limited production. Cushing, Oklahoma a major storage hub also reported a draw of 354,000 barrels. These declines suggest increasing demand or constrained supply pipelines. The drawdown extends to refined products as well, offering further support for bullish sentiment.

Traders and analysts are now turning their attention to the upcoming Energy Information Administration (EIA) report, due later today. This official government data is more widely followed and considered a key benchmark for the oil market. If the EIA figures align with API’s, particularly for oil, it would represent the eighth straight weekly drop in those inventories. A continued streak of draws would reinforce market confidence in the ongoing demand recovery. Expectations are high that the bullish trend in stocks will be confirmed.