Oil prices are under pressure after the American Petroleum Institute (API) reported a 3.947-million-barrel increase in crude supply, not unexpected because it is after all shoulder season. Yet, a 2.319 million barrel drop in Cushing Oklahoma oil supply should give the bears some pause. The continued draws in the NYMEX delivery point at some point will lend support as this delivery point supply is drying up.

We also saw gasoline supply rise by 4.364 million barrels, which may have been impacted by weaker demand caused by winter weather.  We should start seeing draws soon as refiners and oil companies must draw down the winter blend of gasoline. Distillate inventories also increased by 1.1 million barrels adding to the negative mood this morning.

Yet, it does look like the outside markets are looking more stable and that should lead to more market optimism. The Dollar is weaker against the Yen and that should offer crude some backdoor support.

Really with the global oil demand rising, the selloff in oil should be temporary. We know shale is on the rise, but it is just replacing lost production from other areas, like Venezuela for example.

Venezuela oil production last month fell to its lowest level in 30 years, according to OPEC. In Its monthly published report, it reported that Venezuela produced 1.6 million barrels of oil per day last month. Production in January was down 20% from a year ago.

OPEC says that world oil demand for 2018 will grow by 1.59m bbl/day to 98.6m bbl/day, on the back of a steady rise in global economic activities and increased vehicle sales in the US, China, and India. This comes as global oil inventories continue to fall. In December, OPEC  global stockpiles were about 109 million barrels above the five-year average, which is OPEC's target. "In line with the existing overhang, the market is only expected to return to balance towards the end of this year.”