WTI marches higher toward $70 as supply concerns return

• Saudi Arabia suspends shipments through Red Sea lane following attack  on two tankers.
• Easing concerns over a trade war provide an additional boost to crude oil prices on Thursday.

After retracing a big portion of this week’s gains and testing the $69 handle, the barrel of West Texas Intermediate gathered strength and reached a fresh weekly high at $69.90. As of writing, the barrel of WTI was up 0.75% on the day at $69.75.

Earlier today, Saudi Arabia announced that it temporarily suspended oil shipments through the Red Sea’s  Bab al-Mandeb strait following reported attacks by  Yemen’s Iran-aligned Houthi movement on two of its big tankers.  “The passage is not as crucial as the Strait of Hormuz… but restricted flows through it would have an impact not just for crude but also for products due to the longer voyage time,”  Phil Flynn, an analyst at Price Futures Group in Chicago, told Reuters.

Although Kuwait Oil Company stated that the recent tensions in the Red Sea would have a limited impact on its oil shipments, it failed to set investors’ mind at rest.  

In the meantime, the positive impact of easing tensions over a possible trade war between the United States and the EU continues to be felt in the commodity markets. Following his meeting with the European Commission President Jean-Claude Juncker, U.S. President Donald Trump said that they would hold off on further tariffs while the negotiations with the EU were ongoing and added that they were going to continue to reduce the trade barriers.

Technical levels to consider

The initial support for the WTI aligns at $69 (psychological level/50-DMA), $68.20 (Jan. 25 low) and $67 (Jul. 17/Jul. 18 low). On the upside, resistances align at $70 (psychological level/daily high/Jul. 19 high), $71 (20-DMA) and $71.65 (Jul. 13 high).