Crude oil prices are declining. prior to OPEC+ and US Federal Reserve meetings. Oil prices dropped on Monday, giving up earlier gains, as investors remained cautious ahead of a U.S. Federal Reserve meeting. That might cause market instability and global suppliers are expected to maintain output at a conference this week.

By 0710 GMT, Brent crude futures were down 74 cents, or 0.8%, to $85.92 per barrel, while U.S. West Texas Intermediate crude was lower 61 cents, or 0.8%, at $79.07 per barrel.

Crude Oil Outlook Eyes FOMC

The market anticipates the Federal Reserve to increase interest rates by at least 25 basis points abreast of its policy scheduled meeting for January 31–February 1. Fueling concerns that the Fed’s prolonged raises in borrowing costs will stifle the growth of fuel demand in the largest oil end user in the world.

The likelihood of interest rate increases at the upcoming Fed meeting is weighing on price of oil.  When they practically convene on February 1, ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, commonly referred as OPEC+, are unlikely to change their existing oil supply policy.

However, Brent and WTI posted their first weekly decline in three last weeks, due to a possible increase in petroleum exports from Russia’s Baltic ports in early February.

CRUDE OIL BACKWARDATION/CONTANGO, VOLATILITY

The current level of contango in the WTI oil market is the steepest since November 2020. The cost was substantially less back then than it is now.

Volatility is still quite low while this is going on, which may indicate that the market is not overly concerned with the recent price movement.

Crude Oil Technical Indicators

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