Oil prices stabilized on Tuesday following a significant rise in recent trading sessions, as traders looked for further insights from the impending U.S. presidential election and a major political gathering in China.
On Monday, oil prices surged after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) postponed plans to boost production this year, creating a tighter market outlook. However, despite these recent increases, oil prices remained close to the near three-year lows experienced earlier in the year, with market concerns lingering over slowing demand, particularly from China, the largest importer.
Increased tensions in the Middle East also provided limited support for crude prices. By 20:02 ET (01:02 GMT), January Brent oil futures had decreased by 0.2 percent to $74.93 per barrel, while West Texas Intermediate (WTI) crude futures saw a similar decline, falling 0.2 percent to $70.90 per barrel.
Focus on China’s NPC meeting for stimulus insights
The Standing Committee of China’s National People’s Congress, the nation’s most influential political body, began a four-day session on Monday. The NPC is anticipated to approve additional fiscal spending by the government, especially following Beijing’s announcement of a series of fiscal measures aimed at bolstering economic growth.
Read more: OPEC+ extends voluntary oil output cuts until the end of the year
Uncertainty surrounding fiscal measures
However, specifics regarding the magnitude or scope of these planned initiatives remain unclear, as only the NPC can authorize increased fiscal expenditure. Recent reports suggest that the country might greenlight approximately $1.4 trillion in additional debt over the coming years. Any indications of concrete stimulus measures from China could bolster oil markets, given that the nation is the world’s largest crude importer. Ongoing worries about declining demand in China have been a significant drag on oil prices.
Anticipation surrounding U.S. elections, Fed meeting
Markets are also closely monitoring developments in the U.S. as the country approaches a highly competitive presidential election on Tuesday. Recent polls indicate a neck-and-neck race between Donald Trump and Kamala Harris, leaving the outcome uncertain.
Economic indicators to watch
Following the elections, attention will shift to a Federal Reserve meeting, where a cut in interest rates by 25 basis points is widely anticipated. The elections and the Fed’s decisions are expected to provide further insights into the world’s largest fuel consumer, especially as demand is projected to soften with the approach of winter.
On Monday, oil prices continued their ascent, gaining over $1 after OPEC+ announced a one-month delay in its output increase plans. This move comes as the market braces for a week featuring the U.S. presidential election and a key meeting in China. By 04:02 GMT, Brent futures had risen by $1.18 per barrel, reflecting a 1.61 percent increase to $74.28 per barrel. Meanwhile, WTI crude experienced a rise of $1.21 per barrel, or 1.74 percent, reaching $70.70.
Geopolitical tensions and price fluctuations
On Friday, oil prices also climbed, gaining more than $1 per barrel as they sought to offset weekly losses amid rising geopolitical tensions in the Middle East. Brent crude futures for January delivery rose by $1.41, or 2 percent, reaching $74.22 a barrel by 04:56 GMT, while U.S. WTI crude futures increased by $1.46, or 2.1 percent, to $70.72 per barrel, following a 0.95 percent uptick in the prior session.
Weekly outlook and market predictions
Despite these recent gains, prices are projected to decline by over 1 percent for the week, struggling to recover from a significant 6 percent drop experienced earlier. This decline was spurred by Israel’s military actions against Iran on October 26, which, while avoiding strikes on oil and nuclear facilities, did not disrupt energy supplies. Analysts believe that the rebound in WTI could continue, potentially targeting last Friday’s closing price of approximately $71.80, as tensions in the Middle East remain a primary concern.
Inventory reports and production levels
Additionally, the U.S. Energy Information Administration (EIA) reported an unexpected decline in gasoline inventories to a two-year low due to rising demand, while crude inventories also fell unexpectedly as imports decreased. Notably, the EIA pointed out that the U.S., the world’s leading oil producer, reached a monthly production record of 13.4 million barrels per day in August.
Market sentiment and future expectations
On Thursday, oil prices continued to build on prior gains, driven by positive sentiment regarding U.S. fuel demand following an unanticipated drop in both crude and gasoline inventories. Speculation regarding OPEC+’s potential delay in its planned output increase also added to the supportive environment. By 05:05 GMT, Brent crude futures had risen by 47 cents, or 0.65 percent, reaching $73.02 per barrel, while U.S. WTI crude futures, set to expire that day, climbed by 43 cents, or 0.63 percent, to $69.04 per barrel. Both contracts had surged by over 2 percent on Wednesday, recovering from earlier declines as fears of an expanded conflict in the Middle East eased.
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