Oil surged after a surprising weekly inventory report on crude stocks from the Energy Department that showed a decline of 4.6 million barrels for the week ended June 6. Supplies are now down 23.6 million barrels in just four weeks.

Energy also reported that gasoline stocks were up by 1 million barrels, and distillates were up by 2.3 million barrels. Refinery utilization stood at 88.6% of capacity, compared with 89.7% a week earlier.

Nevertheless, refiners’ utilization “has significantly improved over the last month as the gasoline crack spread has expanded mightily,” wrote Chris Lafakis, of Moody’s Economy.com. “Crack spread expansion has provided refineries with all the incentive they need to churn out extra gasoline.”

Crack spread is the margin that a refinery can earn by refining a barrel of oil into finished products such as gasoline.

There’s no way he’s going to “call for a top in this market,” wrote John Person, president of National Futures Advisory Service. “Not by a long shot … Unless we close back under the $118 level, I would continue to be a buyer in this market on substantial breaks like we did last week near the $122-to-$125 level.”

Source: Oil Comes Storming Back

Oil was spurred higher by rising tensions in the Middle East, in the form of raids launched by the Turkish air force against Kurdish positions inside Iraq.

Analysts remain confused, even the same analyst.

On the one hand, “It just doesn’t look like this market is getting ready to turn around and go down for a long term,” said Darin Newsom, of commodities information provider DTN. “The news in Iraq helps confirm there are still problems on the supply side.”

But on the other, “If the rally in the U.S. dollar index gains momentum and money begins to come out of crude oil, the bearish technical signal established this week could lead to a larger selloff ,” Newsom said.