On Monday, WTI crude oil futures traded above $68 per barrel, as China's economic recovery sparked optimism for higher global crude oil demand. Additionally, market participants are closely watching the upcoming OPEC+ meeting, as the group is expected to delay its previously planned production increase for the third time.

China’s Economic Recovery Boosts Oil Demand Outlook

The recent data showing that China’s factory activity expanded for the second consecutive month in November has raised hopes for a tentative recovery in the world's largest importer of crude oil. This follows a series of stimulus measures introduced by Beijing in late September, aimed at reviving the economy. While the recovery remains slow, the expansion in manufacturing signals an uptick in oil demand as industrial activity picks up, supporting prices.

OPEC+ Meeting Anticipates Production Delay

Attention also remains focused on the delayed OPEC+ meeting, which was rescheduled for later this week. The group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing nations like Russia, is widely expected to postpone a planned increase in oil production for the third time in response to the weak global demand and economic uncertainties. The decision is likely to maintain tighter supply conditions, which could keep oil prices elevated.

Geopolitical Tensions Inject Risk Premium Into Oil Prices

In addition to economic factors, geopolitical tensions in the Middle East are contributing to a risk premium in oil prices. Despite a ceasefire agreement between Israel and Lebanon, fighting resumed, with both sides accusing each other of violating the truce. The conflict continues to stir uncertainty about stability in the region, a critical area for global oil supply.

Furthermore, Iran’s pledge to support Syria’s government following the capture of Aleppo by insurgents has added to the geopolitical risks surrounding Middle Eastern oil production. This situation has the potential to affect oil flows, further heightening market volatility.

Conclusion

As WTI crude oil prices remain above $68 per barrel, the market is factoring in a combination of China’s recovery, the looming OPEC+ meeting, and persistent geopolitical risks. While the economic outlook in China offers hope for increased oil demand, ongoing tensions in the Middle East continue to inject volatility into oil prices. As the OPEC+ group prepares to meet later this week, the focus will likely be on the decision to maintain production cuts, which could continue to support higher prices in the near term.