Oil prices have been rising for the third day in a row despite increasing coronavirus restrictions in different countries worldwide. For example, Germany has imposed restrictions on public gatherings during the New Year holidays. From now on, private gatherings will be limited to 10 people. Similar measures have been taken in Scotland, Ireland, Portugal, the Netherlands, and South Korea. Nevertheless, optimism about global economic growth is growing noticeably.
In the meantime, the US currency is depreciating. The US dollar index, which measures its value against the basket of six major currencies, has dropped sharply to almost a weekly low. A weaker dollar favors the rise in oil prices as oil commodities become more available to holders of other currencies.
Brent oil futures were up by 0.27% and reached $75.48 per barrel. WTI crude oil rose by 0.22% to $72.91 per barrel.
A bullish factor for oil was a larger-than-expected drawdown in US oil inventories last week. As reported by the Energy Information Administration (EIA), US crude stockpiles fell by 4.7 million barrels to 423.6 million barrels. According to the Wall Street Journal, analysts had expected a much smaller decline by just 2.6 million barrels. Crude stocks at Cushing, Oklahoma, rose by 1.5 million barrels last week. At the same time, oil production was lower by 100,000 barrels.
According to data from the EIA, gasoline inventories also jumped by 5.5 million barrels, far exceeding analysts' expectations for an increase of just 100,000 barrels. Such a significant increase in gasoline supplies is signaling that the spread of the Omicron strain has already restricted traffic despite the holiday season. If this continues, the oil market may face falling demand for fuel which is usually followed by a downtrend.
The further direction of prices also depends on the US dollar. The data released yesterday showed that the US economy expanded by 2.3% year-on-year in the third quarter of 2021, while experts predicted GDP to rise by only 2.1%.
