The WTI benchmark traded lower on Thursday, falling below $78 as traders took some profits from this week’s strong rally. The rally brought oil up from $72 to $79, a gain of 9% in the first three days of the week.
Demand and supply are balancing together
This week, oil prices surged due to optimism for a demand rebound in China and supply interruptions caused by an earthquake in Turkey and Syria. Earlier this week, the International Energy Agency confirmed its projection for a robust rebound in Chinese demand this year.
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While some network flows from Iraq to Turkey have restarted after being halted earlier this week, colder temperatures have prevented the resumption of exports from the main port of Ceyhan. This development predicts a near-term deficit of supplies to areas of Europe and Israel.
However, this was offset by worries about a supply surplus in the United States, the largest oil user in the world. Wednesday’s government statistics indicated that US oil stocks increased for the seventh straight week, with gasoline and distillate stockpile increases indicating that demand for retail fuel remained sluggish.
Who destroyed Nord Stream?
In other news, but also related to oil prices, Russia has demanded an international probe into the demolition of Nord Stream. This came after a former US investigative journalist claimed that the United States were responsible for the blasts of the gas pipelines last fall, according to Vyacheslav Volodin, the speaker of the Russian parliament.
Seymour Hersh, an American investigative journalist, published in a blog post titled “How America Destroyed the Nord Stream Pipeline” on Wednesday that the US put explosives on the bottom of the Baltic Sea in order to destroy the pipes.
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Volodin referred to the accusations as “facts”. Volodin also wrote on Telegram, that the published facts should become the basis for an international investigation. This investigation is to be aimed at Biden and his “accomplices” and result in compensating of countries affected. He basically labelled the US President, Joe Biden, “a terrorist who ordered the destruction of the energy infrastructure of his partners—Germany, France, and the Netherlands.”
Short-term technical analysis
The selling zone is still near prior highs of $82, and oil must recapture it to confirm a medium-term rally with a price objective of $90. On the other side, support might be found at $75 along the short-term uptrend line.
WTI 1D chart, source: tradingview.com, author’s analysis