Key information
- Brent oil futures fell slightly to $72.62 per barrel.
- West Texas Intermediate crude oil futures fell to $68.80 a barrel.
- OPEC+ is expected to extend production cuts until the end of the first quarter of next year.
Oil prices rose slightly before falling again on Wednesday, as market participants anticipated an extension of supply curbs by the OPEC+ alliance this week. At the same time, heightened geopolitical tensions continue to influence market sentiment. At the time of publication of this article, Brent futures are quoted at $72.62 per barrel, while US West Texas Intermediate (WTI) futures are at $68.80 per barrel.
On Tuesday, the price of Brent experienced its biggest increase in two weeks, of 2.5%. Several geopolitical events have contributed to this upward momentum: a fragile ceasefire between Israel and Hezbollah, the brief declaration of martial law by South Korea and a rebel offensive in Syria that threatens the involvement of several producing countries of oil. All of these factors have supported oil prices, according to Priyanka Sachdeva, senior market analyst at Phillip Nova. In the meantime, prices are falling again.
Global geopolitical tensions
In the Middle East, Israel has indicated it is prepared to resume hostilities with Hezbollah if the truce fails, promising greater incursions into Lebanon and targeting the state itself. South Korea, meanwhile, is grappling with a political crisis after lawmakers began impeachment proceedings against President Yoon Suk Yeol following his brief declaration of martial law on Tuesday.
Despite this bullish sentiment, crude oil prices fell to around $73 per barrel, after encountering resistance at $75, suggesting that the market's sensitivity to geopolitical and economic developments is weakening.
OPEC+ plans extension of production cut
OPEC+ is expected to extend production cuts until the end of the first quarter of next year when its members meet on Thursday. Industry sources have informed Reuters that the organization aims to gradually reduce supply throughout next year. Tamas Varga, oil analyst at PVM, emphasized that “neither geopolitics, nor OPEC+ action, nor optimistic financial data will change the underlying fundamental outlook. Prolonged attempts to push oil toward $80 a barrel will be hampered by supply controls and loose oil balances. »
U.S. crude oil inventories increased by 1.2 million barrels last week, according to market sources citing data from the American Petroleum Institute. Gasoline inventories also increased by 4.6 million barrels, even during the Thanksgiving holiday season when demand typically increases. Official U.S. Energy Information Administration data on oil stocks is expected to be released Wednesday at 10:30 a.m. ET (1530 GMT). Analysts polled by Reuters forecast crude inventories falling by 700,000 barrels and gasoline inventories rising by 639,000 barrels.
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