Oil Prices Dip Despite Tight Supply as Investors Eye Fed Meeting

Oil prices declined on Monday morning despite a tight supply, as investors adopted a cautious stance ahead of the Federal Reserve's policy meeting scheduled for this week, where interest rates are expected to remain unchanged. Additionally, geopolitical tensions appear to be lessening.

The Federal Open Market Committee (FOMC) is set to convene for its two-day meeting starting Tuesday, with a strong consensus reflected by the CME Fedwatch Tool, which indicates a 97.1% likelihood that the central bank will maintain the current interest rates. The focus remains on the timing and possibility of future rate cuts as inflation continues to exceed the 2% target.

On the geopolitical front, tensions are showing signs of easing. Reports indicate that Hamas will participate in ceasefire talks in Cairo. Concurrently, US Secretary of State Antony Blinken is planning to visit the region to persuade both Israel and Hamas to agree to a truce.