- The Oil price rises 1.7% to near $59.30 as the OPEC+ agrees to hold the Oil supply from the first quarter of 2026.
- OPEC+ approves the mechanism that will assess members’ production capacity.
- Firm Fed dovish expectations strengthen the Oil demand outlook.
West Texas Intermediate (WTI) futures on NYMEX trade 1.7% higher around $59.30 during the Asian trading session on Monday. The Oil price attracts significant bids at open as the OPEC+ agrees to halt the Oil output increase from the first quarter of 2026.
This year, the Oil price has remained under pressure as members of the OPEC+ increased the output by 2.9 million barrels per day (bpd) into the market since April 2025. The announcement of a pause in the oil supply hike has come at a time when the United States (US) has been making efforts to bring peace to the war between Russia and Ukraine.
The US could unwind sanctions on Russia if it agrees to make peace with Ukraine. Such a scenario will prompt the global Oil supply.
Additionally, the OPEC+ has approved a mechanism that will assess members’ maximum production capacity to be used for setting output baselines from 2027, against which members’ output targets are set, Reuters reported.
Meanwhile, firm hopes of an interest rate cut by the Federal Reserve (Fed) in its monetary policy meeting this month are also supporting the Oil price. Lower interest rates by the Fed bode well for the Oil demand outlook.
According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in December is 87.4%.
