SINGAPORE, Jan. 30 (Reuters) – Oil prices fell on Monday, relinquishing previous gains as global producers are likely to leave production unchanged at a meeting this week and investors are cautious ahead of a meeting of the US Federal Reserve That Can Fuel Market Volatility.
Brent crude oil futures fell 20 cents, or 0.2%, to $86.46 a barrel at 0435 GMT, while US West Texas Intermediate crude was at $79.57 a barrel, down 11 cents, or 0 .1%.
Ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, collectively known as OPEC+, are unlikely to adjust their current oil production policies when they meet virtually on February 1.
Still, an indication of an increase in crude oil exports from Russia’s Baltic ports in early February led Brent and WTI to post their first weekly losses in three last week.
No change in OPEC+ output is expected to be announced at this week’s meeting and we expect commentary on the US Fed’s outlook to be the main driver of the outlook in the near term, analysts said. the National Australia Bank in a research note.
Ahead of the Federal Reserve’s policy meeting scheduled for January 31-February. 1 the market broadly expects the US central bank to scale back rate hikes to 25 basis points (bps) from 50 bps announced in December, fueling concerns about an economic slowdown that could dampen fuel demand among the world’s largest oil consumer, could take away.
Oil prices previously rose amid tensions in the Middle East after a drone strike on oil producer Iran and as China, the world’s largest importer of crude oil, vowed over the weekend to foster a consumption recovery that would support fuel demand.
“It is not really clear yet what is happening in Iran, but any escalation there could disrupt the oil flow,” said Stefano Grasso, senior portfolio manager at 8VantEdge in Singapore.
“We have Russia on the supply side and China on the demand side. Both can fluctuate above or below expectations by more than 1 million barrels per day,” said Grasso, formerly an oil trader with Italy’s Eni.
“China seems to have surprised the market in terms of how quickly they are coming out of zero COVID, while Russia is surprised in terms of export volume resilience despite the sanctions.”
China will resume business this week after the Lunar New Year holiday. The number of passengers traveling ahead of the holiday rose above levels seen in the past two years, but is still below 2019 levels, Citi analysts said in a note, citing data from the Department of Transportation.
“Overall recovery in international traffic remains gradual, with high single to low teen rates returning to 2019 levels, and we expect further recovery when outbound group travel resumes on Feb. 6,” Citi’s note said.
Reporting by Florence Tan and Emily Chow; Edited by Muralikumar Anantharaman and Christian Schmollinger
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