Oil prices soared after we are seeing the reduced risk of a trade war but increasing risk of heating up the real war in Syria. After conciliatory remarks by Chinese President Xi Jinping promising to announce plans to open China’s economy, including lowering tariffs for cars and enforcing the legal intellectual property and technology transfers of foreign firms in the country. President Trump tweeted that he was “very thankful for President Xi of China’s kind words on tariffs and automobile barriers…also, his enlightenment on intellectual property and technology transfers. We will make great progress together!” The reducing odds of a trade war will force to focus on the supply-demand for balance for oil which is decidedly bullish.

While the American Petroleum Institute (API) did report a +1.758-million-barrel crude build they shocked with a 3.849 million barrel drop in distillate supply. Gasoline supply increased 2.005 million barrels and a 1.452-million-barrel increase in Cushing Oklahoma. With crude and gasoline well below the 30-day demand coverage threshold, we will have to do much better than that to calm the bullish oil fires.

It is also hard to be short with signs that an attack of Syria may be imminent. President Trump vowed to respond to a chemical weapons attack in the country that he and others blame on Syrian President Bashar Hafez al-Assad. Reports of military planes and fighter jets flying near the Syrian Iraqi border. A report that Russia was upset that the U.S. failed to tell them that they were moving aircraft carriers into the region. Russia vows to shoot down U.S. missiles if Donald Trump launches strikes against Syria. President Trump reportedly is building a coalition to respond to the attacks with talk that France, UK, and Saudi Arabia among others could be involved as opposed to a unilateral action. Worries that the attack might start a proxy war with Iran and Russia. who are Assad backers and happen to be major oil producers. Just saying.

This comes after Saudi Arabia is saying they want to see oil at $80 which was our beginning of the year target. Now with the risk rising, tight supplies matter. Right now, in the U.S., crude oil supply is at 26.1 days of supply, gasoline at 25.6 days of supply, jet fuel at 23.2 days of supply, distillates: 32.1 days of supply and propane: 24.8 days of supply. Gas prices and crude and distillate have upside risk if we see any disruption from war or weather.