Oil prices fell as traders focused on the possibility of a supply glut ahead of the OPEC+ meeting
Global oil markets experienced a volatile selling session in early trading, with prices falling due to traders' concerns about the possibility of a global supply glut, outweighing cautious optimism regarding the US-China trade negotiations.
Market figures:
Brent crude, the global benchmark, fell 2.1% to $63.52 a barrel.
West Texas Intermediate crude fell 2.2% to $59.94 a barrel.
OPEC+ looms over the market
Investors' greatest concern is what the OPEC+ alliance will decide at its meeting on Sunday.
Analysts expect the alliance to focus on discussing a possible slight increase in production for December, raising concerns about fueling an oil oversupply at a time when the pace of the global economic recovery remains uncertain.
Trade Optimism Loses Its Luster
The prevailing mood of anticipation also contributed to the dissipation of the initial positive impact of progress in US-China trade talks, which failed to maintain momentum as the trading session progressed, reflecting the market's caution and lack of conviction regarding a permanent and immediate solution to the ongoing trade dispute.
Supporting Factor: US Sanctions Limit Losses
On the other hand, fears of supply disruptions acted as a supportive factor and a barrier to further sharp declines.
The market is still trying to assess the full impact of US sanctions imposed on the oil sector in Russia, one of the world's largest oil producers, and the potential disruption they could cause to global supply flows.
Finally, the global energy sector now turns its attention to the crucial OPEC+ meeting, which will have the final say on short-term market trends. The decision made by the alliance will determine the outcome.
Whether production increases or the current cut policy is maintained will determine whether prices succumb to oversupply pressures, or whether the risks of supply shortages due to sanctions and geopolitical turmoil will continue to keep oil above critical support levels.
