Oil futures in NY rebounded smartly this week retracing about half of the losses sustained during last week’s selloff. London’s Brent crude has been slower to rebound permitting the WTI-Brent spread to close still further to $11.15, the smallest since last June. Much of the impetus for the price rebound came from surging equity markets which saw the S&P setting a new high on Wednesday.

Oil price movements, both down and up, in the last 10 days have been largely due to trader perceptions concerning the course of the global economy for little has changed in the supply and demand for oil and products.

The weekly stocks report showed a unexpectedly small 250,000 barrel gain in US crude inventories, while gasoline stocks increased by 1.7 million barrels — the first increase in two months. US domestic crude production was up 30,000 b/d last week to 7.18 million.

The glut at Cushing jumped another 900,000 barrels last week to 50.1 million despite all the efforts to drain it away to the Gulf coast and divert shipments to other locations. Interestingly, Goldman Sachs says that US crude production is not increasing as fast as expected and the firm now expects that Cushing will peak for the year at around 53 million barrels in late April or early May.

US refineries are returning from maintenance and operating at higher rates which was responsible for the smaller than expected jump in crude stocks and the increased gasoline inventory. Gasoline prices have fallen steadily in the last six weeks and are now 33 cents a gallon lower than last year at this time; however, domestic demand remains weak despite the optimism concerning an economic rebound on Wall Street. The EIA says the US spring-summer gasoline consumption will slip to a 12 year low of 8.8 million b/d.

The 2013 hurricane forecast is out with the odds of the US being hit by a major storm up considerably from last year. The Pacific warming phenomenon, El Nino, which creates wind shear that tears up Atlantic hurricanes, is not as strong this year.

Natural gas futures fell on Monday and Tuesday, but then rebounded sharply on Wednesday, at one point trading as high as $4.16 per million BTU’s after weather forecasters said temperatures will be much below normal across a broad stretch of the US for the next six to ten days. Analysts expect that this week’s inventory report will show that US natural gas stocks are below their five-year average for this time of year, 32 percent lower than in 2012.

The outlook for the world’s economy is not good. OPEC and the EIA lowered their forecasts for the growth in oil consumption for 2013 and 2014. The IEA will be heard from shortly. The EIA which is more optimistic than the others has global consumption increasing by 1 million b/d this year and 1.3 million in 2014. The EIA says Chinese consumption is expected to grow by 450,000 b/d this year from 380,000 in 2012. This compares to an average annual increase of 540,000 b/d between 2004 and 2010.

China reported stronger trade in March, but some analysts are skeptical that the data may be inflated and be giving a distorted picture of the actual situation.

The Middle East is about the same. The struggle for Damascus continues with rebels slowly getting closer and the government continues to launch counterattacks accompanied by air and artillery strikes to drive them back. The Kurds may be able to rework an old natural gas pipeline to start exporting oil to Turkey by the middle of the year.

In the wake of the latest round of unsuccessful negotiations, Tehran now says it will start up five new nuclear reactors. Nothing is likely to happen with the negotiations until after the June elections in Tehran.