Oil prices didn’t change much on Monday. On one hand, there’s hope that demand for oil will go up because factories in China are making more products. On the other hand, people are worried that the U.S. Federal Reserve might not lower interest rates at their meeting in December, which can affect oil demand.
Brent crude oil prices dropped just 1 cent to $71.83 a barrel. Meanwhile, U.S. West Texas Intermediate crude went up 10 cents to $68.10. A private report showed that Chinese factories are doing better in November, which is good news for the economy. But there are also trade threats from U.S. President-elect Donald Trump.
In the Middle East, a ceasefire between Israel and Lebanon seems shaky. Israel announced on Monday it was attacking targets in Lebanon after both sides blamed each other for breaking the ceasefire. Despite some problems, the U.S. Pentagon reported that the ceasefire is mostly holding.
Traders are also keeping an eye on Syria, worried that the ongoing issues there could lead to more problems in the region and affect oil supply. Last week, oil prices dropped more than 3% due to easing worries about supply from the Israel-Hezbollah conflict and predictions of more oil than needed in 2025, even with planned output cuts.
OPEC+, a group of oil-producing countries, has postponed their next meeting to December 5, where they’ll talk about delaying an oil production increase planned for January. If they postpone this increase, it could help prevent oil prices from falling further.
Money managers are being cautious and want to see how the new Trump administration’s policies will affect the market, as well as what OPEC+ decides regarding oil supply.
On top of all this, the Atlanta Federal Reserve President Raphael Bostic said he is still deciding whether to cut interest rates in December. Higher interest rates can make it more expensive to borrow money, which can slow down the economy and decrease oil demand.
Additionally, the U.S. dollar is getting stronger. Trump recently threatened to impose 100% tariffs on countries in the BRICS group, unless they agree not to create a new currency that could replace the dollar. A stronger dollar means that oil, which is priced in dollars, becomes more expensive for people using other currencies, leading to less demand.
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