No more wheeling against the wind, it was onwards and upwards for oil futures in the US session.

After a rare lull price action when the macro scrim sullied by bearish comments on the US economy from Treasury Secretary Mnuchin and US Fed Chairman Powell on Tuesday, it was upwards and onwards for oil futures, which notched their highest close in 10 weeks after prices soared on a bullish to consensus EIA inventory draw.

The draw favourably confirms the empirical evidence that gasoline demand is returning to standards as traffic congestion rises in major cities across the US with consumer driving habits returning to a state of pre-COVID-19 normalcy.

The string of weekly inventory beats is quite a turnaround from when we saw record inventory “swells” only a few weeks ago. But today’s EIA draw is an unambiguous reading and provides clear evidence of recovering US demand, a plunging US supply response but most likely a favourable combination of both.

With greater certainty on supply reductions resulting from additional production cut commitments from Saudi and the UAE and accelerating curtailments and shut-ins in the US, traders are more confident than ever that the market will balance in 3Q20 and that conditions will be in a significant deficit in 4Q or even before.

Near-term risks remain, and there is some justified worry that sentiment could turn on a dime if there is bad news on the duration of the coronavirus disruption, or if the US-China tensions flare.

But with unequivocal evidence of rebalancing markets at a quicker pace than even imaginable only a few weeks ago. Along with the incomprehensibly large global stimulus which is starting to find its way into commodity markets providing a significant tailwind as colossal oil consumption economies around the world reopen, traders are now confidently looking through the near-term noise and focusing on the medium-term outlook when it’s soon to be all systems go for oil markets when the global economy fully opens for business in the next month or so.

In Asia, oil markets could find further support if the NPC opens up a more accommodative monetary and fiscal policy stance. China’s ‘Two Sessions’ kicks off today with the People’s Consultative Conference, followed by the National People’s Congress on Friday.

Oil markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp