Oil Falls Slightly, Is the Rally Over?
Oil prices weakened slightly on Tuesday as the market focused more on OPEC+'s plan to increase production than on the euphoria surrounding a potential US-China trade deal. Brent is currently hovering around $65.59 per barrel and WTI is at $61.26 per barrel. Investors are looking at two paths: supply could potentially increase, but global demand could also strengthen if trade tensions ease.
Internal sources say OPEC+—which includes OPEC countries and allies like Russia—is leaning toward increasing production again in December. After years of output cuts to support prices, the group has been reversing its strategy since April. If supply continues to rise while global inventories remain tight, it will put downward pressure on oil prices.
On the other hand, there is a price-supporting factor: hopes for a new trade deal between the US and China. The two countries, also the world's two largest oil consumers, are scheduled to bring the discussions to a leadership level when President Donald Trump and President Xi Jinping meet this Thursday in South Korea. The market sees a thaw in relations between the two countries, which could improve the global economic outlook—and energy consumption.
New US sanctions against Russia are also still part of the story. Last week, the US targeted major Russian oil companies like Lukoil and Rosneft as part of pressure related to the Ukraine war. This briefly drove the biggest weekly oil price increase since June. But now the outlook is calmer: many market participants believe the impact of these sanctions is likely to be short-term. With global supply capacity still slack, the risk of a wild oil price increase is considered limited. (Asd)
Source: Newsmaker.id
