Oil prices have increased slightly in the early hours of Tuesday as essential decisions on interest rate policies and inflation data are awaited. There are doubts that production cuts by OPEC+ next year will be enough to compensate for the excess supply of crude oil and weak growth in demand for fuel.
At 0337 GMT, Brent crude futures for February delivery increased by 0.33% to $76.28 per barrel, while US West Texas Intermediate crude futures for January delivery rose to $71.59 per barrel, up 0.38% or 28 cents.
On Monday, both contracts settled slightly higher. Brent crude rose by 19 cents to $76.03 a barrel, while West Texas Intermediate crude rose by nine cents to $71.32.
“Today’s US CPI data will be closely watched to determine the direction of US policymakers at their next meeting,” noted IG market analyst Yip Jun Rong.
The US CPI report is set to be released on Tuesday, while the two-day Federal Open Market Committee monetary policy meeting will conclude on Wednesday.
The Federal Reserve is expected to leave interest rates unchanged, but policymakers remain concerned about stubborn inflation and may tighten further if necessary, according to minutes from their November meeting.
The OPEC+ group, consisting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, had committed to reducing the production of 2.2 million barrels per day in the first quarter of 2024.
Investors remain skeptical about the decline in overall supply as production growth in non-OPEC countries is expected to lead to excess supply next year.
Analysts from ANZ Research noted that US shale oil activity continues to grow, while other non-OPEC producers are experiencing unexpectedly large increases.
Brent crude prices fell to $80 per barrel for Brent crude at the beginning of December, while West Texas Intermediate crude dropped below $77 during the same period.
