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Oil prices remained largely unchanged on Tuesday, with investors holding off major moves ahead of OPEC’s anticipated monthly report. Market sentiment was also shaped by China’s recent underwhelming stimulus measures and continued oversupply concerns.
As of 07:45 GMT, Brent crude futures inched up 4 cents to $71.87 per barrel, while U.S. West Texas Intermediate (WTI) crude dipped slightly by one cent to $68.03 per barrel. This follows a significant drop in both benchmarks, which fell over 5% across the past two trading sessions.
China’s Stimulus Falls Short
Beijing’s latest economic relief effort—a colossal 10-trillion-yuan ($1.4 trillion) debt package aimed at alleviating local government financing challenges—was met with skepticism. The stimulus was unveiled as China contends with renewed trade tensions spurred by Donald Trump’s re-election and his continued threats of tariffs on Chinese goods. Analysts, however, expressed concerns that this package might be insufficient to meaningfully accelerate the country’s economic recovery.
Adding to investor worries, China’s inflation data released over the weekend pointed to economic sluggishness, with consumer prices rising at their slowest rate in four months and producer price deflation worsening.
Investors are now eagerly awaiting the Organization of Petroleum Exporting Countries’ (OPEC) monthly report, due later on Tuesday. The report could be pivotal in setting oil’s next price trajectory, especially if it contains further downward revisions to demand forecasts stretching into 2025. Such adjustments could exert additional pressure on oil prices.
Strong U.S. Dollar and Inflation Outlook
Compounding the challenges for oil markets, the U.S. dollar remained firm, trading around a four-month high. Expectations are mounting that Donald Trump’s policies will support higher U.S. interest rates for an extended period, bolstering the dollar. A strong greenback generally weighs on oil prices, as it makes dollar-priced commodities more expensive for international buyers.
Market participants are also gearing up for key U.S. inflation data and remarks from Federal Reserve officials later in the week. Both could provide further insights into the future path of U.S. monetary policy and its implications for global markets.
In summary, oil prices are poised delicately, with the OPEC report, global economic signals, and currency movements all set to play crucial roles in determining their next direction.
