Oil prices were modestly lower this morning, and continued to pull back from the highs hit on Monday. Crude continues to trade within a relatively narrow range, mainly between $70 and $75 for front-month WTI (the USO ETF as above), and has yet to find a catalyst to help it break out significantly in either direction. Prices did gap higher this afternoon following the latest weekly inventory data update from the US Energy Information Administration. The report’s headline was that crude inventories dropped 9.233 million barrels, well below both last week’s number of 2.492 million, and an expected draw of 1.4 million barrels. The inventory draw at the Cushing Hub was slightly lower than expected, while gasoline inventories rose by 4.912 million barrels, way above the 2 million barrel build expected. But the report was considered bullish overall, helped by the news that distillate stocks fell by 1.417 million barrels, against an expected build of 1 million barrels. The news saw USO jump back above $75. But at the time of writing, it wasn’t enough of a jump to take back above Monday’s short-lived high above $76. It seems unlikely that a single report will do much to change the current dynamics. Concerns that hostilities may escalate and spread across the Middle East continue to put a floor under prices. On the flip side, there’s still plenty of supply available to meet the current predictions of future demand. This continues to be the case even when supply is threatened as was the case over the weekend due to the successful Ukrainian drone strike on the Russian Ust-Luga oil terminal. Likewise, threats to Red Sea shipping from Yemen-based Houthi drone and missile attacks, have so far only resulted in small price blips. Many tankers have diverted away from this area to take the longer route around the south of Africa.