Oil prices continued their recent rally this morning as traders hiked its risk premium as Israeli PM Netanyahu arrived in Washington to pressure President Trump to take a hard line in talks with Iran, even as the API report overnight showed a huge rise in US inventories last week.

"Oil trades firmer, with Brent back above USD 69 as Middle East tensions sustain a modest risk premium. The US signaled it is considering seizing tankers carrying Iranian oil, while President Trump threatened to deploy another aircraft carrier should nuclear talks with Iran fail," Saxo Bank noted.

The threats of violence in the Persian Gulf - a region that supplies about a fifth of the world's daily oil consumption - comes even as signs supply remains well ahead of demand.

"While rhetoric remains belligerent at times, there are no signs, at least for now, of escalation, and the U.S. President believes that Iran will ultimately want to strike a deal on its nuclear missile programme," PVM Oil Associates analyst Tamas Varga said in a note.

If API's huge build is confirmed by the official data, the battle between geopolitical risk premia and over-supply gets harder (but admittedly this is very much affected by the freezing storms).

Expect another volatile week of EIA data with “significant winter freeze noise,” Macquarie energy strategist Walt Chancellor said referring to last month’s storm.

API

• Crude +13.4mm

• Cushing

• Gasoline +3.3mm

• Distillates -2.0mm

DOE

The official data confirmed a large crude build (largest since Jan 2025), but smaller than feared from API. Gasoline stocks rose for the 13th straight week while Distillates saw stocks fall for the second week...

Source: Bloomberg

This build pushed total crude stocks up to their highest since June...

Source: Bloomberg

Stockpiles at Cushing, Oklahoma, rose to 25.1 million barrels, the highest level since April 2025. The weekly build is the largest in almost a month, and the first increase on inventories since the week ending Jan. 16. 

US Crude production rebounded as expected from its winter storm plunge...

Source: Bloomberg

Crude prices started giving some back before the inventory data as stocks tumbled following the 'good' jobs news. However, WTI remains higher on the day (back near its highest since January)...

Source: Bloomberg

Finally, in its monthly Short-Term Energy Outlook released Tuesday, The EIA again warned global inventories will rise this year and next on high output from OPEC+ and producers in the Americas.

"Despite near-term tightness from disruptions, we assess that strong global oil production growth will continue to outpace oil consumption over our forecast, driving our assessment that global oil inventories will increase. We expect this trend to continue in both 2026 and 2027. We forecast that global oil inventory builds will average 3.1 million b/d in 2026, compared with an average build of 2.7 million b/d in 2025, before decreasing to average of 2.7 million b/d in 2027," the agency said.

In the wider market, OPEC left its supply-demand expectations for the oil market largely unchanged in its monthly report, but highlighted that global oil demand for the wider group's crude will drop by 400,000 bpd in the second quarter compared to the first.