Oil pries rallied to one-month highs today after China’s stimmy package prompted demand hope (and OPEC doubled down on forecasts that global oil demand will keep growing to the middle of the century).

Additionally, the threat of another hurricane in the Gulf Coast, “dealt a blow to the bearish sentiment that dominated the oil markets in the past three weeks,” Claudio Galimberti, global market analysis director at Rystad Energy, wrote in a market update Tuesday.

“The stimulus is good news for oil demand, which has been weaker than expected, specifically in China, for the past three months,” he said.

Will the draws in Crude and at the Cushing hub continue…

API

Crude -4.34mm (-800k exp)

Cushing -26k

Gasoline -3.44mm (-500k exp)

Distillates -1.12mm (-1.2mm exp)

API reports inventory draws across the board with a large crude and gasoline draw…

Source: Bloomberg

‘Tank Bottoms’ loom at the Cushing Hub…

Source: Bloomberg

WTI traded off the highs into the API report

“Though oil rebounded last week, we do not see the current price as accurately reflecting a wider Middle East war scenario. Many market participants have seemingly written off a threat to regional oil supplies,” Helima Croft, head of global commodity strategy at RBC Capital Markets, said in a note.

“While we are not forecasting a closure of the Strait of Hormuz, we do think that direct Iranian involvement would raise the prospect of a repeat of the 2019 scenario when the IRGC (Islamic Revolutionary Guard Corps) and allies targeted tankers and critical energy infrastructure in the region,” she wrote.

Finally, as a reminder, all these bullish biases are hitting with hedge fund shorts at record highs.