WTI retreats as OPEC+ production pause offset by US Dollar rally

• WTI retreats toward $60.40 after briefly rising above $61.00 earlier in the day.
• OPEC+ confirms a limited production hike for December but plans to pause further increases in Q1 2026.
• The US Dollar extends its rally, hitting a fresh three-month high, weighing on dollar-denominated commodities.

West Texas Intermediate (WTI US Oil trades around $60.45 on Monday at the time of writing, down 0.40% on the day, after briefly touching $61.29 earlier in the day. The pullback comes as the US Dollar (USD) strengthens and risk sentiment remains subdued, despite OPEC+ signaling a pause in production increases next year.

On Sunday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to raise output by 137,000 barrels per day in December, while confirming that it would halt additional hikes during the first quarter of 2026. The decision reflects the group's intention to prevent a new supply glut early next year, as inventories have risen notably in recent months. According to Reuters, this cautious stance shows OPEC+'s effort to "protect prices and maintain market stability" amid lingering demand concerns.

Geopolitical risks continue to support Crude Oil prices to some extent. Over the weekend, a Ukrainian drone strike hit one of Russia's main Black Sea Oil ports, setting a fire and damaging a vessel. The attack heightens concerns about supply security, particularly as Russia, already under fresh Western sanctions targeting the main Oil companies Rosneft and Lukoil, struggles to sustain its export capacity.

However, the strength of the US Dollar is limiting Crude Oil's upside. The Greenback remains near its strongest levels in three months after Federal Reserve (Fed) Chair Jerome Powell downplayed the likelihood of another rate cut in December. Powell stated that a December cut is "far from a foregone conclusion," noting that policymakers held "strongly different views" at last week's meeting.

The CME FedWatch tool shows that the chances of a 25-basis-point rate cut in December have dropped to 69% from over 90% before the Fed's meeting. This shift in expectations has fueled a renewed rally in the USD, curbing demand for risk assets and commodities priced in dollars. The US Dollar Index (DXY) hit a new three-month high of 99.94 on Monday, extending its winning streak to a fourth consecutive day.

Investors now turn their attention to Tuesday's American Petroleum Institute (API) weekly inventory report, which will offer fresh insights into US Crude Oil stock trends.