Oil prices showed little movement on Tuesday, trading within a narrow range as markets focused on the upcoming OPEC+ meeting scheduled for December 5.
Market Performance:
- Brent crude rose 14 cents (0.19%) to $71.97 a barrel by 0404 GMT, after a marginal decline of 1 cent on Monday.
- West Texas Intermediate (WTI) increased by 8 cents (0.12%) to $68.18, following a 10-cent gain in the previous session.
OPEC+ Meeting and Output Cuts:
Analysts from ANZ noted that traders are in “wait-and-watch mode” as OPEC+ deliberates whether to extend production cuts through the first quarter of 2025. Sources indicate that the group, which produces about half of the world’s oil, is leaning toward deferring any plans to unwind cuts due to oversupply concerns.
Priyanka Sachdeva, a senior market analyst at Phillip Nova, expects the extension may be brief, given pressures from member nations to increase output. She also predicts oil prices may remain in a limited range with a downward bias, citing weak demand as a key factor.
Demand Concerns and Price Pressures:
- China’s oil demand is forecasted to peak as early as next year, exacerbating the gap between global supply and demand.
- Saudi Arabia is expected to lower crude prices for Asian buyers to the lowest levels in four years.
- Last week, oil prices dropped over 3% on both sides of the Atlantic, reflecting ongoing market challenges.
Economic and Geopolitical Factors:
- Uncertainty surrounding the U.S. Federal Reserve’s December rate decision has weighed on prices. While Fed Governor Christopher Waller hinted at supporting a rate cut, Atlanta Fed President Raphael Bostic suggested that upcoming jobs data could influence the final decision.
- In contrast, China offered some positive signals with its purchasing managers’ index hitting a seven-month high in November.
Geopolitical tensions in the Middle East added to market caution. A U.S.-brokered ceasefire between Israel and Hezbollah showed signs of strain, with casualties reported in southern Lebanon following renewed hostilities.
The mix of weak demand forecasts, potential policy shifts, and geopolitical instability has left oil markets in a state of limbo, with traders keenly awaiting clarity from OPEC+ and upcoming economic data.
