WTI bulls stay on top in short squeeze

• A Russian missile fired as part of an attack on Ukraine's energy systems landed in NATO member Poland.
• WTI spikes after a key pipeline bringing Russian oil to Eastern Europe was halted.

West Texas Intermediate, (WTI) put in a short squeeze in the final part of the Wall Street session on Tuesday, moving into in-the-money shorts from the start of the week's trading. At the time of writing, the black gold is trading at $87.47 and is higher by some 0.7% on the day so far. 

The main news of the day comes with reports of a Russian missile fired as part of an attack on Ukraine's energy systems landed in NATO member Poland, killing two. Poland's leaders are in an emergency meeting referred to as a "crisis situation". Polish media reported two died in the attack near the village of Przewodow, close to the country's border with Ukraine. Polish foreign ministry has since confirmed that a Russian-produced rocket fell on the Polish village Przewodów. In response, NATO Security General Stoltenberg will chair an emergency meeting of NATO Wednesday morning.

Prices spiked late in the session after a key pipeline bringing Russian oil to Eastern Europe was halted after power was cut, analysts at ANZ Bank reported. ''The Ukrainian pipeline manager said Russian artillery was the cause. The halt affects flows to Hungary, Czech Republic and Slovakia. The length of the pipeline outage is still unknown. This comes ahead of European sanctions on Russian crude oil imports on 5 December. Crude oil prices had been under pressure earlier in the session amid concerns over demand.''

The report offset the bearish IEA news that said the agency has cut its forecast for 2023 demand growth to 1.6-million barrels per day from 2.1-million bpd this year, while expecting demand in the final quarter of this year to contract by 240,000 bpd. "The GDP outlook has worsened and 4Q22 global oil use will contract (-240 kb/d) compared with last year. China's persistently weak economy, Europe's energy crisis, burgeoning product cracks and the strong US dollar are all weighing heavily on consumption," the agency said in its report. 

''Earlier this week, OPEC also voiced its concern about demand and subsequently cut its fourth quarter demand forecast. Rising COVID-19 cases in China also weighed on sentiment, despite hopes of easing virus restrictions earlier in the week,'' analysts at ANZ Bank explained. ''Several major cities continue to record high levels of cases. Travel also remains subdued across the country as the public remains concerned it will be caught up in quarantine.''

In separate news, China has reported a surge in Covid infections and many people under lockdown in the manufacturing hub of Guangzhou took to the streets to protest by breaking the confinement barriers. Weak demand from China has been weighing on oil prices. Reuters reported ''new cases in Guangzhou rose above 5,000 for the first time, raising concerns the city of more than 15 million could face wider lockdowns, with the country on Monday reporting a total 17,772 new cases of the coronavirus, up from 16,072 a day earlier.''