A series of increases in oil prices and falls in the value of the dollar

Oil price in the world markets it has been growing continuously for four weeks, which may be the longest series of increases since October 2021. Today in the morning the price of a WTI barrel exceeds USD 82, and Brent crude oil exceeds USD 85.

The reasons for the price increases can be found in the disruptions in gas supplies from Libya and Kazakhstan as well as decreasing inventories in the USA. Latest EIA report showed that US crude oil inventories fell last week by 4,553m barrels, to the lowest level since October 2018. This reading was significantly out of line with market expectations at 1,904m.

China between the omicron and the intention to release reserves

China, No. 2 crude oil consumer in the world, suspended some international flights and stepped up efforts to contain the virus outbreak in Tianjin, while the highly infectious omicron variant has spread to the northeastern city of Dalian.

Reuters reported that Beijing agreed with Washington in late 2021 to release strategic oil reserves over the Lunar New Year holiday, beginning on February 1. This, in turn, may mean that further increases in oil prices may be limited, as the increase in prices may trigger a new supply from oil reserves.

The dollar with the biggest losses in several months

Price increases oil it seems to be accompanied by a decline in the US dollar, the weakness of which may have a positive impact on the price of the commodity. The USD may be headed for its largest weekly decline in eight months, with the USD index appearing to decline by more than 1% over that time.

The downward trend in the USD started as investors pulled back 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 could be largely priced in by the markets.

President Federal Reserve Jerome Powell in his speech to Congress also dispelled expectations of a more aggressive monetary tightening.

Investors are now waiting for more data that will have an impact on the monetary policy. Signs of strong economic growth could be enhanced by the faster pace of policy normalization.