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Oil prices rallied on the day as signs of a demand recovery from the US to Europe stoke optimism among producers and analysts in the crude market, combined with waning hopes for an Iran nuke deal.

Oil is in “strong demand right now,” with economies around the world opening up, Daniel Yergin, the oil historian and vice chairman at consultant IHS Markit Ltd., said in a Bloomberg Television interview.

“Oil is bid on the Iran timeline to adding barrels getting kicked further into the future–sometime between August and the fall,” says Bob Yawger at Mizuho.

After last week’s across-the-board draws, analysts expected another week of demand dominance.

API

• Crude -5.36mm (-3.3mm exp)

• Cushing +741k

• Gasoline +2.51mm (-1.1mm exp)

• Distillates +1.585mm (-1.6mm exp)

While crude stocks tumbled more than expected, gasoline and distillate stocks unexpectedly rose last week…

Source: Bloomberg

WTI hovered just below $68.80 ahead of the API print and barely budged on the mixed data…

“There’s plenty of room for upside here,” said Bob Yawger, head of the futures division at Mizuho Securities.

“Summer and the reopening of the economy is bullish for demand,” while “it looks much less likely we’ll have Iranian barrels any time soon than it did last week.”

But, the question now is whether oil prices can hold their gains “amid strong demand, despite plenty of downside risk on the supply side,” said Robbie Fraser, global research & analytics manager at Schneider Electric, in a daily report.