Global Tensions Fuel Oil Price Stability
As the world grapples with escalating geopolitical tensions, oil prices have found a sense of stability, with traders anticipating an extension to supply cuts from OPEC+ this week. The Brent crude futures rose by 0.26% to $73.81 a barrel, while U.S. West Texas Intermediate crude futures increased by 0.19% to $70.07.
Middle East Uncertainty Supports Oil Prices
The fragile ceasefire between Israel and Hezbollah, along with South Korea’s brief declaration of martial law, has contributed to the upward trend in oil prices. A rebel offensive in Syria, which could draw in forces from several oil-producing countries, has also added to the uncertainty. According to Priyanka Sachdeva, senior market analyst at Phillip Nova, these developments have lent support to oil prices.
OPEC+ Meeting Looms Large
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are expected to extend output cuts until the end of the first quarter next year when members meet on Thursday. Industry sources have revealed that OPEC+ is likely to maintain its 2.2 million barrels per day voluntary production cut. This move is seen as a bid to phase out supply cuts through next year.
Market Sensitivity Wanes
Despite the bullish momentum, crude prices have failed to breach the $75 resistance level, indicating that market sensitivity to geopolitical and economic developments may be waning. Dilin Wu, research strategist at Pepperstone, notes that prices are likely to stay range-bound unless a new catalyst emerges.
Supply Checks and Loose Oil Balances
PVM oil analyst Tamas Varga believes that neither geopolitics nor OPEC+ action will alter the underlying fundamental outlook. Protracted attempts to push oil towards $80 a barrel will be reined in by supply checks and loose oil balances.
US Crude Oil Inventories Rise
According to market sources, U.S. crude oil inventories rose 1.2 million barrels last week, citing data from the American Petroleum Institute. Gasoline stocks also increased by 4.6 million barrels, despite the week including Thanksgiving, when demand typically rises. Official data on oil stocks from the U.S. Energy Information Administration is due on Wednesday at 10:30 a.m. ET (1530 GMT). Analysts expect crude stocks to decline by 700,000 barrels and gasoline stocks to rise by 639,000 barrels.
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