Crude oil futures eased on Monday, following a week of gains, as traders positioned themselves ahead of the Federal Reserve’s meeting later this week, where a rate cut is widely anticipated.
Profit-taking and subdued activity ahead of the holiday season could contribute to a pullback, creating a cautious mood among market participants.
This sentiment introduces a slightly bearish outlook for global crude prices in the short term, as traders adjust their positions in anticipation of policy developments. At the same time, the market remains near its lows for the year and has been trading in a range for the last few months as uncertainty continues.
However, oil prices found some support in geopolitical risks, including risks of new US sanctions targeting Russia and Iran with U.S. Treasury Secretary Janet Yellen emphasizing ongoing efforts to limit Russia’s oil revenue. Additionally, expectations of a rate cut by the Federal Reserve, coupled with recent cuts by other central banks, could provide support for the market.
The combination of supply constraints and accommodative monetary policy could help improve the outlook for the market to a certain extent. Nevertheless, forecasts of abundant oil supply in 2025 and signs of softer demand from China could temper any bullish sentiment, limiting substantial upside potential.
