Key information
- Oil prices fluctuate despite the ceasefire between Israel and Hezbollah.
- Market participants are awaiting the results of Sunday's OPEC+ meeting to determine future production levels.
- Analysts expect WTI crude oil to trade in the range of $65-$70 per barrel due to various market factors.
Oil prices fluctuated on Wednesday, as investors assessed a recent ceasefire agreement between Israel and Hezbollah, while anticipating the outcome of the OPEC+ meeting scheduled for Sunday. Brent crude futures for February were quoted at $72.43 per barrel at the time of publishing this article, while US West Texas Intermediate (WTI) rose to $68.95 per barrel.
On Tuesday, both benchmarks were down after the ceasefire agreement between Israel and Lebanese Hezbollah, brokered by the United States and France. The agreement entered into force on Wednesday and market participants have been closely monitoring its implementation.
Market expectations
Analysts predict that WTI crude will likely trade in a range of $65 to $70 per barrel, given factors such as weather conditions during the northern hemisphere winter, potential increases in oil production and shale gas under the incoming Trump administration in the United States, and changing demand trends in China.
Experts from Goldman Sachs and Morgan Stanley said current oil prices are undervalued, citing an existing deficit in the market and potential risks to Iranian supplies due to possible sanctions under a future Trump presidency.
Impact of the OPEC+ meeting
Discussions within the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries and its allies led by Russia, indicate a potential further delay in the oil production increase planned for January. The group, responsible for producing around half of the world's oil, had initially planned to gradually ease production cuts through 2024 and 2025. However, falling global demand and increasing production in outside OPEC+ have cast a veil of uncertainty on this plan. A final decision will be made at the December 1 meeting.
Current market sentiment suggests that traders anticipate a relatively low-volatility outcome from the OPEC+ meeting, with consensus likely to delay the unwinding of existing voluntary cuts of 2.2 million barrels per day until the first quarter of 2025.
Other developments
Separately, President-elect Trump announced plans to impose 25 percent tariffs on all products entering the United States from Mexico and Canada, which could impact crude oil prices . Meanwhile, in the United States, crude oil inventories fell last week, while fuel stocks increased, according to API figures. Crude oil inventories fell by 5.94 million barrels in the week ending Nov. 22, beating analysts' expectations of a decline of about 600,000 barrels.
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