On Monday, during the Asian early trading session, international oil prices slightly declined. Concerns about potential supply disruptions in the Middle East showed signs of easing because the United States and Iran released signals over the weekend indicating that they would "continue talks," causing the previously elevated geopolitical risk premium to recede.
Price Performance: Brent and WTI Decline Together
In the market, Brent crude oil's April contract fell to around $67.6 per barrel, while WTI crude hovered around the $63.1 mark, with both dropping less than 1%.
U.S.-Iran Confirms Continued Talks: Middle East Tensions Temporarily Eased
In terms of news, Washington and Tehran stated that after indirect talks held in Oman, both parties agreed to continue discussions around nuclear issues. For traders, the statement that "dialogue is ongoing" at least short-term reduces the imagination of a rapid escalation of conflict, thereby affecting regional oil flows.
Meanwhile, the market still recalls the U.S. reinforcing its military presence in the region and the U.S.'s use of terms like "possible tougher measures," which once factored in a higher risk premium for oil prices; however, when signals of continued talks appear, the premium is more easily reduced.
Rising Macroeconomic Variables: Dollar and U.S. Non-Farm Payrolls, CPI to Dominate Short-Term Rhythm
Apart from geopolitical factors, macroeconomic aspects are also constraining the upside potential for oil prices. The dollar remains resilient after retreating last week, and the market is waiting for two key data releases to recalibrate interest rate expectations: the U.S. January Non-Farm Employment Report on February 11 (Wednesday) and the U.S. January CPI on February 13 (Friday).
Against a backdrop of divergent interest rate paths and ongoing market evaluation of Federal Reserve policy prospects, data that reinforces the pricing of "longer retention of high rates/delayed rate cuts" typically acts as a drag on commodities through channels of the dollar and risk appetite.
Demand Side Clues: Watching China's Data and Lunar New Year Travel Effects
On the demand side, as one of the world's largest crude oil importers, China will also release significant economic data this week. As the Lunar New Year holiday approaches, the market will simultaneously observe changes in fuel consumption due to inflation and travel, judging whether seasonal demand can provide a buffer for oil prices.
