Crude inventory rose 4.05 mmb to 374.6 mmb for the week ended April 24, probably due to decline in demand. Stockpiles at Cushing increased for the second week while the weak distillate market continued adding stocks, by +1.79 mmb, last week. However, WTI crude oil price did not react much to the worse-tha- expected result and the benchmark contract recovers to 50.82 in US morning. We think this may be driven by the large withdrawal in gasoline inventory which was lowered by 4.7 mmb (consensus: +0.2 mmb) to 212.6 mmb.
Firmness in oil price is also led by US' GDP released earlier. In 1Q09, GDP contracted -6.1% in 1Q09. While worse than market expectation of -4.7%, the reading did show slightly improvement from the huge -6.3% decline in 4Q08. Looking into details the drop was driven by slumps in inventory and business investment. While it will take some time for the latter to recover, slide in inventory implies that companies will start to re-build inventories. Further added to the optimism was strong rise in consumer spending which reinforced the notion that the pace of US recession may have moderated.