Oil prices traded slightly lower on Tuesday as markets remained cautious ahead of the anticipated OPEC+ meeting later this week.
By 2pm AEDT (3am GMT) Brent crude futures dipped by $0.10 or 0.1% to US$71.73 per barrel, while U.S. West Texas Intermediate (WTI) crude edged down $0.13 or 0.2% to $67.95 per barrel.
OPEC+, which produces about half of the world’s oil, faces mounting pressure as China moves closer to peak oil demand, potentially widening the gap between global supply and demand. Saudi Arabia, a key OPEC member, is also expected to reduce crude prices for Asian buyers to the lowest levels in four years, further signalling weaker demand from key markets.
On the macroeconomic front, concerns over U.S. Federal Reserve policy are influencing oil markets. The prospect of the Fed maintaining interest rates at current levels during its December meeting has offset some optimism arising from improved Chinese economic data.
Meanwhile, Federal Reserve Governor Christopher Waller indicated further support for another rate cut this month, though Atlanta Fed President Raphael Bostic cautioned that upcoming U.S. jobs data could influence the decision.
Geopolitical developments in the Middle East added further uncertainty. A U.S.-brokered ceasefire between Israel and Hezbollah showed signs of strain, amid airstrikes in southern Lebanon following Hezbollah missile attacks on Israeli positions.
Last week, oil prices saw a decline of over 3%, underscoring the ongoing volatility in global energy markets.