Image credit: A/S Global Risk Management

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Yesterday's trade closed slightly higher following a draw reported by the API.

The oil market has cooled down from $85 and is now back to the $80 level. Yesterday, the price once again tested the $80 threshold but got rejected back into $80 territory.

No major news occurred yesterday, and the market seems to be assessing whether Saudi Arabia will be able to offset the missing barrels from Iran. Saudi Arabia has been out during this week expressing interest in offsetting the missing Iranian barrels, especially with regards to India.

Disputes between the US and Saudi Arabia are arising as a columnist disappeared from the Saudi embassy in Turkey. Following the incident, the US have threatened Saudi Arabia in case the columnist was killed. Saudi Arabia responded by what the media sees as an implicit threat - using their oil exports as a weapon if the US were to take any actions against the kingdom. If true, this is the first time since the 1970s oil embargo they have used their oil as a geopolitical weapon.

However, what allegedly drove the market to a slightly higher close and an even higher current level was that the API reported a draw on the US crude stocks of 2.1 mbbl. The API also reported a large draw on gasoline of 3.4 mbbl and a small draw of 0.24 mbbl on distillates.

Later today the EIA releases its weekly inventory stats.