WTI/RBOB extended gains overnight (WTI at 3.5yr highs) following Trump's Iran decision and a surprise crude draw reported by API, and DOE data confirmed the draw (even larger) along with gasoline and distillate draws. US crude production jumped to a new record high.

“It’s the time of year when you expect oil draws because refiners start coming back fairly soon from maintenance season,” says James Williams, president of energy researcher WTRG Economics.

API

• Crude -1.85mm (+1mm exp)

• Cushing +1.653m

• Gasoline -2.055mm

• Distillates -6.674mm - biggest draw since 2004

DOE

• Crude -2.197mm (+1mm exp)

• Cushing +1.388mm

• Gasoline -2.174mm

• Distillates -3.791mm

Over the last couple of weeks, U.S. crude inventories have built up, in part helped by an unusual drop in refining activity, at least compared with last year's trends, but that trend is over this week with crude surprisingly drawing down 2.197mm barrels...

Distillate inventories are near their five-year lows on a seasonal basis...very unseasonal!

Additionally, Bloomberg reports that gasoline demand soared at its fastest rate since Feb 2016.

Bloomberg's Javier Blas notes a key statistic: Year-to-date, U.S. crude inventories have risen by ~11.5 million barrels. To put that into perspective, consider that over the same period in 2017 they built ~48.8 million barrels.

The difference shows the impact of OPEC and its allies production cuts, particularly Saudi Arabia. The kingdom is shipping a lot less crude into the U.S. year-to-date (722,000 barrels a day) than it did during the same period of last year (1.20 million barrels a day).

Crude imports tumbled...

US Crude Production continues to soar - up an impressive 84k b/d last week to 10.703mm b/d

With WTI hovering around $71 ahead of today's DOE data (ramping off yesterday's Iran decision) and popped above it as the data hit...

“One of the most important deadlines for oil markets was yesterday, with the announcement the U.S. is reinstating sanctions against Iran,” said Luisa Palacios, a director at Medley Global Advisors LLC, in a telephone interview Tuesday. “The second most important deadline is May 20, when Venezuela holds presidential elections.”

Investors traded about $1.8 billion worth of the SPDR S&P Oil & Gas Exploration & Production ETF yesterday, more than three times the average daily turnover for the fund and the most since November 2016.

The largest trade was worth $13.8 million when a trader bought 348,000 shares of the fund.