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Investors expect a reduction in oil supply

Investors expect a reduction in oil supply

Oil prices have risen again and investors are partly betting on the forthcoming reduction in oil supply. Brent futures have reached their highest levels in more than three years. Lower oil production is also expected with the rapidly spreading variant of the coronavirus Omicron and other measures.

Indications that Omicron will continue to spread also support supply disruptions, so we can see an increase in oil purchases. Thus, the bullish mood in the oil market continues, which is also due to the fact that the OPEC + group does not provide enough supplies to meet strong global demand. However, reduced oil production is gradually easing.

Smaller producers are less flexible, unable to increase supplies, and others fear pumping too much oil in the event of renewed COVID-19 failures. If the coronavirus pandemic becomes endemic, we could see a higher increase in demand during the summer, especially in the EU and the USA.

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Performance of Brent Oil Futures (Source: Investing.com)