Oil prices fell on Monday, giving up previous gains as global producers are unlikely to change production at this week’s meeting and investors were cautious ahead of the Federal Reserve’s meeting, which could increase market volatility.
Brent crude futures fell 20 cents, or 0.2%, to $86.46 a barrel at 0435 GMT, while West Texas Intermediate (WTI) crude was down 11 cents, or 0.1%, at $79.57.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, collectively known as OPEC+, are unlikely to change their current oil production policies when they meet online on Feb.
Still, a surge in Russia’s crude exports from Baltic ports in early February caused Brent and WTI to post their first weekly losses in three weeks last week.
No change in production is expected at OPEC+’s meeting this week, and the US Fed’s rate decision is expected to be the main driver in the near term.
The market generally expects the Federal Reserve’s policy meeting scheduled for January 31-February 1 to lower the US central bank’s interest rates from 50 basis points announced in December to 25 basis points.
Oil prices earlier gained amid tensions in the Middle East following a drone attack on oil producer Iran and as China, the world’s biggest crude importer, pledged over the weekend to promote a consumption recovery that would support fuel demand.
It’s not entirely clear what’s going on in Iran yet, but any escalation there has the potential to disrupt the crude oil flow.
Russia plays an active role on the supply side and China on the demand side. Both could stay above or below expectations of more than 1 million barrels per day. China’s zero-COVID rapid abandonment appeared to have taken the market by surprise, while Russia surprises by the resilience of its export volume despite the sanctions.
China is restarting trading this week after the Lunar New Year holiday. Analysts said the number of passengers traveling on the holiday has risen above the levels in the past two years but is still below 2019.
In general, international traffic recovery continues gradually.
