WTI crude is near the highs of the day, up 70-cents to $83.45 in a reversal of losses that occurred in European trading. This is the fourth day in the past five that oil has climbed on signs of tightening US inventories and still-strong demand.

Late yesterday, US Energy Secretary Jennifer Granholm said the US strategic petroleum reserve at year-end will be at or exceeding the level prior to a massive 180 million barrel sale two years ago. However that was disingenuous as she’s only talking about 40 million barrel replenishment, along with the cancellation of 140 million barrels that were expected to be sold from 2024-2027.

The reserve currently holds about 362 million barrels compared to 565 million barrels before the announcement of the sale
in March 2022. It’s highly doubtful the US could get back to that level this year and doing so would boost global demand by 1 million barrels per day.

The bulk of the focus in the oil market right now is on demand and inventories. The weekly US EIA numbers are due tomorrow with the private reading due later today.

Technically, the 61.8% retracement of the Sept-Dec decline is at $84.53 with the psychological $85 level just above. Both of those would roughly coincide with $90 brent, which is a level where OPEC producers may start to pump more (if it’s sustained).