The oil market faces oversupply problems again which are impacting prices.
Oil prices are not strong enough and see a weakness early this week on Monday. Brent crude was trading lower by 10 cents at $60.18, while WTI crude was trading at $51.15, which was a decrease of 5 cents.
Though the OPEC countries along with Russia have planned to cut crude production, both benchmarks are not strong enough for higher prices and investors keenly watch the narrow movement of crude.
In the months of October and November, oil prices have fallen almost 25 percent, though prices are more stable for the past three weeks.
Recent talks between the OPEC countries to reduce about 1.2 billion bpd volume per day from January may help to stabilize and correct the oil market.
However, crude production is still high and with overproduction, the chances of prices stabilizing are still slim say, analysts. Shale output from the United States continues to remain high and this is hindering production cut impact for oil producers in the Middle East. Russia has touched a record high in crude oil production at 11.42 million barrels a day for the month of December.
China, one of the largest importers of crude oil is facing weak economic growth and demand from this country is easing. Similarly, business activities in France are seen to weaken for the month and the country witnesses a slowing growth momentum. Germany is facing difficulties in the expansion of its private sector and has slumped to a four-year low for the month.
The U.S. dollar generally has a significant impact on oil prices. With the Fed meeting to take place this week, the oil market may move according to decisions to be taken at the meeting.
The FOMC or the Federal Open Market Committee of the U.S. will be starting on Tuesday and will continue for two days.