Oil prices were mostly unchanged in Asian markets on Monday after last week’s gains. This was due to the stalled US-Russia talks on the Ukraine issue and hopes that the Federal Reserve would cut interest rates this weekend. Recent US-led talks have failed to resolve the Russia-Ukraine standoff.
Markets are pricing in an 88% chance of the Fed cutting interest rates by 0.25% at its December 9-10 meeting. Lower interest rates will stimulate the economy and boost energy (oil) demand.
Interest rate cuts could weaken the US dollar. A weaker dollar would make oil cheaper for countries using other currencies. This would also boost demand.
However, at the same time, OPEC+’s continued high oil production suggests that there is still plenty of supply in the market.
