Oil prices settle slightly higher but supply glut concerns keep lid on gains

Investing.com — Oil prices settled slightly higher Monday, attempting to steady from the longest drop in five years as investors awaited further catalysts this week as central banks including the Federal Reserve are set to deliver updates on monetary policy.

By 14:30 ET (19:30 GMT), settled up 0.13% at $71.32 a barrel, while expiring in February settled up 0.25% at $76.03 a barrel. Crude prices were nursing seven straight weeks of losses, the longest losing streak in five years.

Central bank decisions on tap this week

Major moves in oil were limited before a string of key central bank meetings and economic readings this week.

The Fed is at a range of 5.25% to 5.50% when policymakers gather for their final two-day meeting of 2023 this week, meaning that special attention will likely be focused on comments from Chair Jerome Powell. Powell, who has stressed that the Fed will only move “carefully,” is expected to attempt to give the bank some flexibility with its upcoming decisions.

Prior to the end of the gathering, Fed officials will have the chance to pour through U.S. inflation data for November, as they try to gauge the impact of a long-standing and unprecedented campaign of rate hikes on price gains.

Beyond the Fed, interest rate decisions from the , the and the are also due this week.

Global monetary conditions are likely to remain tight well into next year, which could temper economic growth and weigh on crude demand.

Supply glut concerns remain in focus

Concerns that global crude supplies could outpace demand continued to weigh sentiment as recent pledges by OPEC and its allies, or OPEC+, to cut production by about 2.2 million barrels per day earlier for three months next year isn’t expected to make a significant dent in global supply.

Growing doubts about whether the three-month cut, which is not only shorter than recent OPEC+ cut agreements but also voluntary, will be extended has also weighed on expectations for supply deficit next year, as the most recent deal showed divisions among members to cut production.

As worries about a supply surplus persist, the demand outlook has been soured by recent data from China, the biggest oil consumer, pointing to a sluggish post-pandemic recovery. Data last week showed that the country’s oil imports sank to a four-month low in November amid high stockpiles and muted demand.

Upgrade your investing with our groundbreaking, AI-powered InvestingPro+ stock picks. Use coupon code INVESTPRO to get a limited time discount on our Bi-Yearly subscription plan. Click here to find out more, and don’t forget to use the discount code when checking out.

(Ambar Warrick contributed to this report._