The oil benchmark – WTI – traded more than 1% higher Thursday. The rally seemed to fade quickly during the US session and the commodity dropped into negative territory.
Pipeline interruption sends the price higher, temporarily
American pipeline operator Colonial Pipeline announced late on Wednesday that its Line 3 had been shut down for unscheduled maintenance. They also noted that a restart was anticipated on January 7th, which contributed to the initial rally on Thursday.
Another important topic: How to become a better investor in 2023
There is little doubt that the general direction is down. It is a bear market, according to Tamas Varga of oil broker PVM, who also stated that today’s bounce was caused by the pipeline disruption.
Somewhat bearish stockpile data
In other news, US oil stocks increased by 3.3 million barrels in the final week of December, according to figures released on Wednesday by the American Petroleum Institute (API). However, the majority of this increase seems to be fuelled by ongoing Strategic Petroleum Reserve releases, suggesting that underlying energy usage remained strong throughout the holiday season.
You may also like: Natural gas suffers another large decline, drops to pre-war levels
The official data, which is due later on Thursday, is expected to show a similar pattern, with analysts predicting a 1.2 million build in inventory. However, it is anticipated that gasoline stocks, a significant indicator of consumer demand, have decreased.
Concerns that China’s increasing Covid cases may postpone an economic recovery in the largest oil importer in the world have been a major factor in the recent selling in crude markets. Following the relaxation of many anti-Covidmeasures in December, the nation is currently dealing with its deadliest outbreak to date.
US jobs market remains robust
Elsewhere, the US job market appeared as strong as ever, despite mounting signs of layoffs at specific businesses and sectors.
According to ADP’s monthly poll released Thursday, private-sector payrolls increased by 235,000 in the month to mid-December, nearly double November’s level of 127,000. Initial claims for unemployment benefits, meanwhile, dropped to 204,000 last week, the lowest level since late September, and below the 225,000 anticipated.
Clear downtrend in the chart
Bears are currently trying to push the black gold below the short-term bullish trendline near $73.40. If successful, today’s rally could be quickly over, likely leading to a decline toward this week’s lows near $72.80, with the major support now seen at the psychological level of $70. As already mentioned, the bear market is evident in the chart as oil is posting lower highs and lower lows
WTI oil 1h chart, source: tradingview.com, author’s analysis
Post has no comment yet.