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WTI Crude Oil Prices Dip Below $68.50 Amid Stronger USD and Anticipation of OPEC+ Meeting

WTI Crude Oil Prices Dip Below $68.50 Amid Stronger USD

WTI Crude Oil Prices Dip Below $68.50 Amid Stronger USD and Anticipation of OPEC+ Meeting

West Texas Intermediate (WTI) crude oil is trading near $68.25 on Monday, pressured by a strengthening US Dollar (USD) and ongoing market uncertainty. A firmer USD, which makes USD-denominated commodities like oil more expensive for holders of other currencies, weighs heavily on crude prices.

Key Factors Impacting WTI Prices

  1. Stronger USD and Federal Reserve Outlook:
    • The USD gained momentum after US President-elect Donald Trump suggested imposing tariffs, raising fears of inflationary pressures. This development could lead to a slower pace of interest rate cuts by the Federal Reserve (Fed).
    • Money markets reflect a 67.1% chance of a quarter-point rate cut in December and a 32.9% probability of the Fed holding rates steady, according to the CME FedWatch Tool.
  2. Supportive Chinese Economic Data:
    • China’s Caixin Manufacturing PMI for November rose to 51.5, surpassing both October’s 50.3 and market expectations of 50.5.
    • The growth, driven by increased foreign orders and exports, provides a positive demand signal for crude oil as China remains one of the largest global consumers of energy.
  3. Geopolitical Tensions in West Asia:
    • Heightened tensions in the Middle East add a layer of uncertainty to oil supply. Iran has pledged support for the Syrian government after insurgents seized Aleppo, raising concerns over potential supply disruptions from the region.
  4. OPEC+ Meeting in Focus:
    • Traders are closely monitoring the upcoming OPEC+ meeting, now rescheduled for Thursday, to discuss output policy for 2025.
    • Some analysts, including Tony Sycamore from IG, suggest that an indefinite delay in production decisions might stabilize or even support oil prices, as previous delays failed to deliver the intended price boosts.

While a stronger USD continues to weigh on WTI, supportive Chinese economic indicators and ongoing geopolitical risks may provide some upside potential. Traders will focus on developments from the OPEC+ meeting for guidance on production policy, which could significantly influence oil market dynamics in the near term.