Oil prices remained largely unchanged in early Tuesday trading as markets digested China’s recent stimulus plan and awaited direction from OPEC’s monthly report. Brent crude futures edged down by 1 cent to $71.82 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 3 cents to $68.07 a barrel by 0158 GMT.
Both contracts had seen sharp declines of over 5% during the previous two trading sessions. The drop came after China unveiled a significant 10 trillion yuan ($1.40 trillion) debt package aimed at easing financial strains on local governments. However, analysts have expressed concerns that the stimulus may fall short of the magnitude required to effectively boost economic growth and, in turn, oil demand.
Market attention is now focused on OPEC’s monthly report, which is expected later on Tuesday. Traders are closely watching for potential downward revisions to the group’s oil demand forecast, particularly through 2025, as such adjustments could add additional downward pressure on prices.
“The prompt time spreads for Brent and WTI have collapsed recently, moving closer to contango, suggesting a better-supplied physical market,” said analysts from ING. A market in contango occurs when near-term contracts are priced lower than future contracts, indicating an oversupply in the current market or stronger demand expectations for the future.
Meanwhile, the stronger U.S. dollar, which closed higher on Monday, continues to weigh on oil prices. A stronger dollar makes oil more expensive for holders of other currencies, adding downward pressure on commodity prices. Investors are also awaiting signals from upcoming U.S. inflation data and comments from Federal Reserve officials later in the week, which could further influence market sentiment.
As oil prices stabilize ahead of OPEC’s report, the focus remains on how geopolitical and economic factors, particularly in China and the U.S., will shape the outlook for global oil demand.
