Oil market attention is centered on this week’s key event as West Texas Intermediate (WTI) crude falls below $70 amid cautious market sentiment. The focus is on the Federal Reserve’s forthcoming decision on interest rates, scheduled to be announced tomorrow, while concerns regarding a slowdown in Chinese demand continue to weigh on market outlooks. In this context, oil price movements will likely remain influenced by global market trends and the direction of major monetary and economic policies.
Data on Chinese retail sales for November came in weaker than anticipated, heightening concerns about a potential decline in consumer spending within the world’s largest oil-importing nation. According to data released by China’s National Bureau of Statistics on Monday, retail sales increased by 3.0% year-on-year in November, a decline from 4.8% in October and below market expectations of 4.6%. Analysts interpret this slowdown as a bearish signal, with subdued forecasts for a recovery in Chinese crude oil demand.
Market participants are expected to adopt a cautious approach ahead of the Federal Reserve’s decision, with some traders potentially engaging in profit-taking. Current market expectations point toward the Fed implementing a 25-basis-point interest rate cut at its upcoming meeting, with attention focused on the accompanying press conference and the release of the “dot-plot” projections for further guidance. Moreover, hawkish rhetoric from Federal Reserve officials could bolster the U.S. dollar and place downward pressure on commodities priced in U.S. dollars.
Conversely, geopolitical risks stemming from sanctions targeting key oil-producing nations could provide support for U.S. crude oil prices. Recently, U.S. Treasury Secretary Janet Yellen signaled the possibility of sanctions on Chinese financial institutions to disrupt financial flows linked to ongoing geopolitical tensions in Eastern Europe. Furthermore, the imposition of stricter sanctions on crude oil exports could offer additional upward support for WTI prices.
