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17.01.202212:18 Forex Analysis & Reviews: How long will oil's growth last?

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Exchange Rates 17.01.2022 analysis

Oil shows growth for the fourth week in a row. The forecast also remains optimistic due to the limited supply and strong demand.

Exchange Rates 17.01.2022 analysis

The risks associated with the Omicron strain of COCID-19 will decrease around the first quarter of this year, which will lead to an even greater increase in demand. In terms of supply, OPEC+'s decision to increase production by 400,000 barrels per day monthly is not so convincing if the bloc members will still not be able to meet the specified production quotas.

OPEC and its partners tried to produce according to their production control agreement. Only a few members of the expanded cartel have the ability to increase production to meet quotas, while the rest are having a hard time, which causes concern about future oil supplies in conditions of high demand.

Bloomberg said that many members fail to return to pre-productivity levels because of the lack of investment.

This means that there could be a supply shortage on the way, aggravating the prospects for insufficient investment in the oil market, which are likely to gain momentum in the coming months, and maybe even years.

As for prices, this means further potential to rise, especially if demand remains as high as it is now.

However, China is a big risk for all this. Therefore, it is worth following the news.

Irina Yanina
Analytical expert of InstaForex
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