WTI below $68.50 amid firm dollar, OPEC+ in focus

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.25 on Monday, edging lower as the stronger US dollar broadly drags the USD-denominated commodity price lower.

President-elect Donald Trump’s statement that he will impose tariffs has led to fears that it could slow the pace of the Federal Reserve’s easing cycle, boosting the dollar.

The rise of the USD against other currencies generally lowers crude oil demand by making oil more expensive for those who use foreign currencies.

According to the CME FedWatch Tool, the money markets have priced in a nearly 67.1% chance that the Fed will cut rates by a quarter point in December, while there is a 32.9% probability that the policy rate will remain unchanged.

The encouraging Chinese economic data released on Monday could provide some support to the black gold, as China is a major consumer of crude oil.

China’s Caixin Manufacturing PMI jumped to 51.5 in November versus 50.3 in October, beating the estimation of 50.5. This growth was driven by the increase in foreign orders since February 2023 and exports.

Furthermore, heightened geopolitical tensions in West Asia raise concerns about supply disruptions from the region, which might lift the WTI price. Iran extended its support to the Syrian government after insurgents took control of Aleppo city.

Looking ahead, oil traders will keep an eye on the OPEC+ meeting on Thursday to discuss output policy for 2025. The meeting was originally scheduled for Sunday.

“An indefinite delay may be the best case for oil prices, given that earlier rounds of delays by a month or so have failed to drive higher oil prices in line with what OPEC+ intended,” said Tony Sycamore, IG’s Sydney-based market analyst.

(Source: OANDA)