Oil prices erase gains, settle at lowest level in a week

Oil drilling rigs

Oil prices reversed their early gains on Tuesday as attention turned to the Federal Reserve's interest rate decision. This also came after data showed a drop in the US industrial production, heightening demand concerns in the world's largest economy.

Brent crude futures for February 2025 delivery dropped 1%, or $0.72, to settle Tuesday at $73.19 a barrel, the lowest level since Dec. 10. Similarly, futures prices for US West Texas Intermediate (WTI) crude for January 2025 delivery fell 0.9%, or $0.63, to $70.08.

The decline in oil market came after data showed a 0.1% fall in the US industrial production last month, marking the third consecutive monthly drop.

Additionally, negative data on domestic consumption in China contributed to the decline, as retail sales slowed to 3% in November from 4.8% in October, which raised demand concerns in the world's two largest economies.

Investors also await the Fed's decision on interest rates, with widespread expectations of a 25 basis point cut on Wednesday. Attention is also focused on Fed Chair Jerome Powell's remarks for further clues on the monetary policy outlook for the coming year.