WTI crude oil has lost around 3 since the start of the week, bouncing back to 88.4 from 91.2 at the beginning of the week. The observed pullback looks like a technical correction to remove local overheating.

This correction comes against a relatively bullish background. Yesterdays data marked a new drop in inventories, both commercial and strategic reserves. The Biden administration has said it may accelerate sales from reserves. Perhaps these comments were a formal excuse for profittaking in the market. However, the start of these sales came with a twomonth rally.

The governments intention to sell off reserves may even have contributed to the rise in prices. The desire to bring prices down is hurting US production rampup plans. Aggressive support for alternative energy has made the hydrocarbon industry unattractive to banks.

As a result, we are seeing a much slower production recovery than in the recovery periods of the last decade. The number of rigs in operation is rising methodically, but it seems that new wells are only marginally offsetting spent ones.

Also, OPEC has repeatedly suggested that the industrys severe underinvestment during the pandemic makes it impossible to ramp up production quickly now. Despite a favourable price environment, the cartel has not picked up quotas in recent months.

It is also worth mentioning that countries are not imposing new travel restrictions but are loosening them more and more, supporting energy demand. Also, commodity…