WTI recently hit $60 per barrel for the first time since November, driven higher by the OPEC+ cuts, as well as by outages in Venezuela and Iran.

Those supply cuts have been tightening up the market for a while now, but the mid-week report from the EIA that showed a massive inventory drawdown helped push WTI over $60 per barrel. Oil prices had seemed to run out of steam just short of that threshold, but the decline of 9.6 million barrels was a surprise.

“It was also the biggest inventory reduction within a week since July 2018…Stocks normally increase at this time of the year, which makes the substantial inventory reduction all the more remarkable,” Commerzbank wrote in a note. “The sizeable inventory overhang that had still been in place until recently was thus eradicated completely.” The investment bank added that the U.S. oil market “is no longer oversupplied…which should benefit WTI and result in further price convergence.”

Other analysts also noted the sudden bullish turn in the oil market. “Oil prices fell sharply at the end of 2018 on widespread concerns that there would be large Q1 inventory builds in the US and globally. Despite these concerns, Q1 has proved to be a period of increasing tightness, with a significant supply deficit,” Standard Chartered analysts, led by Paul Horsnell, wrote in a report. The bank estimated that the decline in inventories so far this year relative to the five-year average has been 0.43 million barrels per day (mb/d), a figure that has surged to 1.51 mb/d over the past two weeks.

There were a few other items of note in the EIA report, including strong gasoline demand, according to John Kilduff of Again Capital. “You’ve got to believe we’re due for a Trump tweet at some point, but I think with demand, these drawdowns, and the refinery snags we’ve been having, it’s kind of a bullish setup,” Kilduff told CNBC.

The outages in Venezuela and Iran, along with the strong production cuts from OPEC+, are undoubtedly tightening up the oil market. The one thing holding back oil prices seems to be concerns about the global economy and how the U.S.-China trade warmight impact that outlook. Oil prices bounced around on recent murmurings about the trade negotiations – up on positive news, quickly down when it seemed that the talks were souring.

Meanwhile, the Federal Reserve just completed an about-face on its previous plans to issues multiple rate hikes this year. Fed Chair Jerome Powell said the bank downgraded expected U.S. GDP growth for 2019 from 2.3 percent to 2.1 percent and acknowledged that the economy was doing worse than previously anticipated. “It may be some time before the outlook for jobs and inflation calls clearly for a change in [interest rate] policy,” Powell said on Wednesday, which suggests that not only will the central bank decline to raise rates at all this year, but that the rate-hiking cycle might be over with for now.

The dovish turn would seemingly be significantly bullish for oil prices. A monetary stimulus (relative to prior expectations) would jolt the economy and help push up crude and other commodities. It would also put downward pressure on the dollar, which, again, would be positive for oil. However, the reason the Fed has made such a dramatic change in direction is because it fears that the economy is not doing as well as it was. Powell went to lengths to offer reassurances that the U.S. economy was strong, but noted that inflation was frustratingly low, investors were pulling back on risk-taking, GDP was growing slower than expected, and unemployment might be a bit higher towards the end of this year.

The fundamentals of supply and demand in the oil market appear to be heading in a bullish direction. But that trajectory is completely at the mercy of the global economy, which is exactly why there is so much emphasis on the outcome of the trade talks between the U.S. and China.