WTI perks up as driving season approaches

• US oil, WTI, rebounds in risk-on market settings. 
• The tightness in product markets is also gathering more attention with the summer driving season.

At $111.63, West Texas Intermediate, WTI, is 2.32% higher having travelled from a low of $104.99 to a high of $112.61 on the day so far. Crude oil prices have climbed for the first time in three sessions despite slowing economic growth as interest rates rise.

The Energy Information Administration on Wednesday reported an unexpected 3.4-million-barrel drop in US oil inventories, while gasoline stocks dropped by 4.8-million barrels. That stockpile now sits below the five-year seasonal average. This comes ahead of the key driving season in the northern hemisphere, where demand hits its seasonal high. Prices have been supported by tight supplies and falling US inventories ahead of the driving season which begins on the Memorial Day weekend.

Analysts at ANZ Bank said that an explosion at a major refinery in Ulsan, South Korea, helped refocus the market on the tightness in refined fuel products. Additionally, the analysts explained that a new report from Russia’s Economy Ministry indicated Russian crude oil production will drop 10% this year and remain below 2021 levels at least until 2025. ''This could be even greater if Europe manages to approve a plant to ban Russian oil. For the moment, Hungary remains steadfast in its demand to phase-in the sanctions over an extended period.''

Meanwhile, analysts at TD Securities explained that ''the tightness in product markets is also gathering more attention with the summer driving season on the horizon, which would see crude demand robust amid record refining margins. In this context, despite macroeconomic angst, crude oil markets may be shaping up for another move higher this summer.''