Oil prices continued to green in Asia early Monday morning. Confidence that the Omicron variant will have less impact on domestic travel in Asia remains in the markets. Even if there are lockdowns in some cities in Asia’s major economies such as China, demand is still expected to remain stable.
- Brent crude futures are up 4 cents, or 0.05%, to $86.40 a barrel.
- WTI crude futures were up 58 cents, or 0.69%, at $84.40 a barrel.
The thesis is also supported by the crude oil inventory data of the U.S. These have declined more than previously expected in the last week. Before a minus of scarcely 2 million barrels was predicted, but the inventory fell by 4.5 million barrels. That leaves the mood in the oil market to continue to be good.
OPEC and allies have gradually eased capacity cuts. However, many small producers are unable to increase supply. Some countries, such as Nigeria or Libya, which have invested less money in the maintenance of oil production facilities in recent years, remain below the required capacity. In addition, Libya continues to face domestic problems that have led to the closure of some oil fields. This gives the oil prices further upwind.
The failed talks on the Ukrainian border between Russia and the West are a factor of uncertainty at the international level. Market participants should continue to keep an eye on this variable.
China and the U.S. government have agreed to release more oil reserves during the Lunar New Year holiday from Jan. 31 to Feb. 6. The background behind this action is to press the further rising oil prices. With regard to the U.S. midterm elections, the Democrats are trying to win votes by correcting the wrongs that have occurred since President Biden was in office. This includes putting downward pressure on rising fuel prices. These have really skyrocketed since President Biden was in office.
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Monday, January 17, 2022