Oil Prices Steady Amid OPEC Report and Economic Concerns

By Colleen Howe

BEIJING (Reuters) – Oil prices showed minimal movement in early trading on Tuesday, as market participants waited for insights from OPEC's monthly report. Recent concerns regarding China's stimulus plan and oversupply issues have impacted market dynamics.

Brent crude futures slipped by 1 cent to $71.82 a barrel by 0158 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose by 3 cents to $68.07 a barrel. Both contracts experienced a decline of over 5% during the previous two trading sessions.

On Friday, China announced a substantial 10 trillion yuan ($1.40 trillion) debt package aimed at alleviating local government financing challenges. However, analysts believe this stimulus is insufficient to significantly enhance economic growth.

Market focus will shift to OPEC's monthly report expected later today. Observers are particularly attentive to possible downward adjustments in the group's demand outlook through 2025, which could further dampen prices.

ING analysts highlighted that prompt time spreads for Brent and WTI have recently collapsed, approaching a state of contango, indicating a physically well-supplied market. In a contango market, contracts for immediate delivery are priced lower than for delivery at a later date, suggesting either ample supply or stronger future demand.

Additionally, the U.S. dollar closed higher on Monday, prompting investors to prepare for further signals from upcoming U.S. inflation data and Federal Reserve commentary this week. This strengthening of the dollar makes oil, priced in U.S. currency, more expensive for foreign buyers, potentially influencing price dynamics.