Oil prices were little changed on Tuesday, awaiting further price direction from OPEC’s monthly report, with investor disappointment over China’s latest stimulus plan and fears of oversupply keeping buying interest at bay.
By 0745 GMT, Brent crude futures rose four cents to $71.87 a barrel. US West Texas Intermediate crude futures fell one cent to $68.03 per barrel.
Both contracts fell more than 5% over the previous two trading sessions.
Deflationary risks from China, as well as the lack of concrete fiscal stimulus measures by Chinese policymakers to stimulate demand, are weighing on sentiment, said Kelvin Wong, senior market analyst at OANDA.
“On the supply side, the ‘Trump trade’ narrative will be one focused on making the United States a major supplier of shale gas, with current North Dakota Governor Doug Burgum, an advocate for oil drilling, being among the shortlist,” he said. Candidates who will be appointed Secretary of Energy during the next Trump administration.
Beijing unveiled a 10 trillion yuan ($1.4 trillion) debt package on Friday to ease local government financing pressures, as the country faces new pressure from the re-election of Donald Trump as US president, who has threatened to impose more tariffs on Chinese goods. .
But analysts said that this amount does not amount to the level of stimulus needed to boost economic growth.
The world’s largest oil importer also released inflation data over the weekend, which showed consumer prices rising at the slowest pace in four months in October while producer price deflation deepened.
More price direction may come from the Organization of the Petroleum Exporting Countries (OPEC) monthly report later on Tuesday.
The market will be looking for further downward revisions in demand forecasts from the group’s forecasts through 2025, which would increase downward pressure on prices.
“We believe that OPEC+ will have to continue postponing the decision to reverse its voluntary cuts. This decision will still lead to a build-up of surplus pressures,” said Vivek Dhar, an analyst at the Commonwealth Bank of Australia.
He added: “The main risk to our forecasts is that OPEC+ is looking to reduce its voluntary supply cuts from January, which will exacerbate oversupply pressures.”
“Any sign that OPEC+ is choosing to defend market share rather than target higher oil prices will likely lead to lower oil prices.”
The US dollar held its highest levels in four months on Tuesday, as it is expected to benefit from Trump’s policies that are likely to keep US interest rates relatively high for a longer period.
Markets are also bracing for more signals from US inflation data and Federal Reserve speakers this week.
A stronger dollar makes commodities denominated in the US currency, such as oil, more expensive for holders of other currencies, and tends to influence prices.