Oil prices ended higher today as traders weighed tightening physical supplies against financial markets that have remained under pressure.

Higher for longer rates weighed on the demand side of traders' minds while physical markets continue to show signs of strength amid refined-product shortages with Brent’s prompt spread strengthening to 95 cents in backwardation, hovering at three month highs.

Additionally, the ongoing tensions in the middle east are supporting prices.

The “oil price is expected to continue to be range-bound short term despite escalating tensions in the Middle East,” said Helge Andre Martinsen, a senior oil analyst at DNB Bank ASA.

“Continued strong non-OPEC production data, from Norway and Canada this week, combined with a soft global economic outlook counter the effect of higher Middle East tensions.”

After last week's huge surprise crude build (and product draws) this week was expected to see more of the same.

API

Another bigger than expected crude build (far bigger) was offset by a bigger than expected Distillates draw...

Source: Bloomberg

WTI was hovering right around $78 ahead of the print and held gains after the build...

Oil has remained in a roughly $10 trading range this year as the push and pull of bearish and bullish factors mute volatility.

Attacks on ships in the Red Sea and the Israel-Hamas war have ramped up tensions in the Middle East and added a geopolitical risk premium to prices.

Still, concerns about the outlook for China’s economy and its impact on consumption, as well as the pace of non-OPEC supply growth, are limiting gains.