The price of crude oil on global markets appears to have risen continuously for four weeks, in what could be the longest series of increases since October 2021. The price of a barrel of WTI is rising above $82 before noon today, while Brent Crude Oil is rising above $85.
The reasons for the price increases could be sought in the disruption of crude supplies from Libya and Kazakhstan, as well as declining stocks in the US. The latest EIA report showed that US crude inventories fell by 4.553 million barrels last week, to the lowest level since October 2018. This was reading far short of market expectations of 1.904 million.
China between omicron and intent to release reserves
China, the world's No. 2 oil consumer, suspended some international flights and stepped up efforts to contain a virus outbreak in Tianjin while a highly contagious variant of omicron spread in the northeastern city of Dalian.
Reuters reported that Beijing has agreed with Washington in late 2021 to release strategic oil stocks over the Lunar New Year holiday beginning February 1. That, in turn, could leave further oil price gains limited as the rally could trigger new supply from oil reserves.
Dollar with the biggest losses in several months
Oil price increases seem to be accompanied by a decline in the US dollar, whose weakness may have a positive impact on crude prices. The USD may be heading for its biggest weekly decline in eight months, with its index seemingly down more than 1 percent in that time.
The USD's downward trend began when investors backed away from hawkish bets on the outlook for US interest rate hikes. December's consumer price index rose at the fastest pace in nearly four decades, but failed to support the dollar, as it was in line with expectations and may have been largely priced in by markets.
Federal Reserve Chairman Jerome Powell in his speech to Congress also tempered expectations for more aggressive monetary tightening.
Investors are now awaiting more data to guide monetary policy. Signs of strong economic growth may reinforce a faster pace of policy normalization.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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