WTI holds losses near $60.50 despite OPEC+ output pause

• WTI declines, possibly pressured by diminishing prospects of further Fed rate cuts.
• Crude oil prices may find support as OPEC+ decides to pause output increases early next year.
• Some analysts cautioned that supply risks remain, citing tighter US sanctions on Russian Oil majors Rosneft and Lukoil.

West Texas Intermediate (WTI) Oil price remains subdued for the second successive day, trading around $60.70 per barrel during the Asian hours on Tuesday. The prices of Oil lose ground, which could be attributed to the market caution surrounding the US Federal Reserve (Fed) policy outlook for the December meeting.

Fed Chair Jerome Powell said last week during the post-meeting press conference that another rate cut in December is far from certain. Powell also cautioned that policymakers may need to take a wait-and-see approach until official data reporting resumes. Fed funds futures traders are now pricing in a 65% chance of a cut in December, down from 94% a week ago, according to the CME FedWatch Tool.

The downside of the Crude Oil prices could be restrained as OPEC+, the Organization of the Petroleum Exporting Countries and its allies, including Russia, decided to pause output increases early next year. Reuters, citing a note from Bank of America (BofA), reported that traders are likely to view OPEC+'s pause as a positive move. The note stated, "It certainly suggests that OPEC+ recognizes the oversupply and likely does not want to push oil prices significantly lower (i.e., below $50)."

The Oil group agreed to a modest production increase in December but plans to halt further additions from January to March due to seasonal demand fluctuations. This decision comes amid growing expectations that the Oil market could face a surplus in 2026, driven by continued supply growth from both OPEC and non-OPEC producers.

However, some analysts warned that supply risks persist, pointing to tighter US sanctions on Russian Oil majors Rosneft and Lukoil, as well as ongoing attacks on Russia's energy infrastructure. The latest Ukrainian drone strike reportedly ignited a tanker and disabled several loading facilities at the Black Sea port of Tuapse, which houses a Rosneft refinery.

According to a note from JP Morgan cited by Reuters, "Our oil strategists maintain their view that while the risk of disruption has increased, US measures, along with complementary actions by the UK and EU, will not prevent Russian Oil producers from operating."