© Reuters.
Oil prices remained unchanged on Tuesday as investors awaited key interest rate policy decisions and inflation data. Doubts persist about whether production cuts by OPEC+ next year will balance the crude oversupply and slowing fuel demand growth.
futures for February held at $76.03 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for January delivery saw a minimal increase of 3 cents to $71.35 a barrel. Both contracts experienced slight gains on Monday, with Brent rising 19 cents and WTI increasing by 9 cents.
OPEC+ has committed to reducing output by 2.2 million barrels per day for the first quarter of 2024. However, investors remain skeptical that this will lead to a total supply reduction, given the expected excess supply from non-OPEC countries’ output growth next year. ANZ Research analysts noted that U.S. shale oil operations and other non-OPEC producers have been producing more than anticipated.
Brent crude has seen a decline from above $80 a barrel at the beginning of December, while WTI has fallen from over $77. The market structure for both WTI and Brent is in contango for the first several months of 2024, signaling that investors expect either lower demand for crude or sufficient supply during those times.
The oil market is closely monitoring the upcoming monthly oil market reports from OPEC and the International Energy Agency. Additionally, negotiations at COP28 are under observation, where a draft of a potential climate deal failed to include the phase-out of fossil fuels, drawing criticism from various countries.
The market is also keeping an eye on central banks’ interest rate policies and U.S. inflation data. The U.S. Consumer Price Index report is scheduled for release today, while the Federal Open Markets Committee’s monetary policy meeting concludes on Wednesday. Interest rate decisions from the European Central Bank and the Bank of England are expected on Wednesday and Thursday, respectively.
In related news, demand for Saudi Arabian from Chinese refiners has hit a five-month low. Higher-than-expected prices have led buyers to seek more affordable supplies, with Saudi Arabia and Russia competing as China’s top oil suppliers.
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