Oil prices stabilized in early trade on Wednesday, as markets assessed the potential impact of a ceasefire deal between Israel and Hezbollah, and ahead of Sunday’s OPEC+ meeting.
Brent crude futures lost 2 cents to $72.79 a barrel by 0114 GMT, while U.S. West Texas Intermediate crude futures were at $68.73 a barrel, down 4 cents, or 0.1%.
Both indexes fell Tuesday after Israel agreed to a ceasefire deal with Lebanon’s Hezbollah.
A ceasefire between Israel and Hezbollah will take effect on Wednesday after both sides agreed to a deal brokered by the United States and France, US President Joe Biden said on Tuesday.
The deal paves the way for an end to a conflict on the Israeli-Lebanese border that has left thousands dead since it was sparked by the Gaza war last year.
Israeli Prime Minister Benjamin Netanyahu said he was ready to implement the ceasefire agreement with Lebanon and would “respond forcefully to any violations” by Hezbollah.
“Market participants are assessing whether the ceasefire will be respected,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
“We expect WTI to trade in a range of $65-70 per barrel, taking into account weather conditions during the northern hemisphere winter, a potential increase in oil production and shale gas under the future Donald Trump administration in the United States, and demand trends in China,” he said.
OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, are discussing a further postponement of a planned increase in oil production that was due to begin in January, two sources said. group of producers on Tuesday, before a meeting on December 1 to decide on policy for the start of 2025.
The group pumps about half of the world’s oil and had planned to gradually reverse oil production cuts with small increases over several months in 2024 and 2025. But slowing Chinese and global demand, as well as increasing production outside the group, put a brake on this project.
In the United States, President-elect Donald Trump said he would impose 25% tariffs on all products from Mexico and Canada. Crude oil would not be exempt from trade penalties, two sources familiar with the plan told Reuters on Tuesday.
Separately, U.S. crude oil inventories fell while fuel stocks rose last week, market sources said, citing API figures on Tuesday.
Crude inventories fell by 5.94 million barrels in the week ended Nov. 22, beating analysts’ forecasts of a decline of about 600,000 barrels.
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