The price of oil fell by about 0.7% after jumping by about 1.5% yesterday. Pressure on prices is exerted by the strengthening of the US currency and continuing concerns about an impending oversupply. However, the prospects for more active stimulus in China next year limit the decline in oil prices.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.14% to 106.29.
Meanwhile, the Chinese government yesterday pledged to maintain "moderately loose" monetary policy, which was the most direct statement on stimulus from the world's largest oil importer in recent years. However, the oil market is on track for a significant surplus next year, which has forced OPEC+ delaying the return of idled production.
Market participants also continue to monitor the situation in the Middle East, where the fall of the Syrian regime of Bashar al-Assad has led to a power vacuum. While Syria itself is not a major oil producer, it is strategically located and has strong ties with Russia and Iran, and a regime change could raise regional instability.
Investors will look for more detailed Chinese policies from the annual Central Economic Work Conference scheduled to begin on Wednesday. In addition, reports on the oil market from OPEC and the International Energy Agency are scheduled to be published this week. Also in focus will be U.S. crude oil inventories data from the American Petroleum Institute due later today, as well as an official report from the Energy Information Administration due tomorrow. Economists predict that crude oil and gasoline inventories declined over the week, while distillate inventories increased.