Oil broke out to finally close the gap to the March 6th level. WTI (Aug) rose above $42 but pared gains on an unexpectedly large build in US crude stockpiles. Crude inventories rose by 7.5m barrels last week, according to the American Petroleum Institute.

The Energy Information Administration is forecast to report a draw of 2.1m barrels when it releases its weekly report later today. If the EIA confirms the API numbers it would be the biggest build in inventories since late May. There is a risk that there is a greater and faster build-up in inventories as states have rolled back some lockdown restrictions and demand may not have picked up as quickly as anticipated. Jobless claims figures indicate far fewer trips made for work, whilst air passenger numbers continue to lag last year despite a pickup in the US. Rising coronavirus case numbers continue to weigh on trader sentiment, albeit OPEC+ production curbs continue to act as a rising balloon for prices.

Vaccine hopes have helped fuel oil prices to rally to their best level since March but at the same time traders as cautious about getting too optimistic when there is so much uncertainty not only over demand, but also supply given the propensity for US shale production to restart as prices move higher.