Oil is at a one-month low, and supply drivers are once again in the spotlight

Oil prices remained at their lowest levels in over a month after experiencing declines over the past two sessions. This was influenced by market speculation surrounding a potential ceasefire between Israel and Hezbollah, alongside increasing crude supplies from OPEC+, which were offset by a possible reduction in U.S. fuel stocks.

Brent crude futures rose by 38 cents, or 0.5%, reaching $71.50 per barrel as of 0451 GMT, while U.S. West Texas Intermediate crude futures gained 43 cents, or 0.6%, to $67.64 per barrel.

Prices dropped for a second consecutive session on Tuesday following an Axios report that Israeli Prime Minister Benjamin Netanyahu was set to meet with various ministers and military and intelligence leaders to discuss diplomatic solutions to the conflict in Lebanon. According to Axios, Israeli and U.S. officials suggested that a ceasefire agreement to halt the fighting between Israel and Hezbollah could be reached within weeks.

"Given the significant decline in oil prices since the start of the week, a stabilization attempt may occur in today’s session. However, overall gains are likely to remain limited due to the absence of bullish catalysts for a sustained upward movement," stated IG market strategist Yeap Jun Rong in an email.

He noted that a potential ceasefire in the Middle East could mitigate the risk of broader conflicts affecting oil production, while OPEC+ is set to unwind its production cuts soon.

OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, plans to increase output by 180,000 barrels per day in December. The group has previously cut production by a total of 5.86 million barrels per day, which is about 5.7% of global oil demand.

Market attention is likely to shift back to OPEC due to the anticipated output increase in December, and analysts from ANZ highlighted that weak demand in China will also be closely monitored.

Meanwhile, U.S. crude oil and fuel inventories decreased last week, according to sources who cited figures from the American Petroleum Institute. Crude stocks fell by 573,000 barrels in the week ending October 25, with gasoline inventories dropping by 282,000 barrels and distillate stocks decreasing by 1.46 million barrels.

In contrast, nine analysts surveyed by Reuters had predicted a 2.2 million-barrel increase in crude inventories. The official U.S. government data is expected to be released later on Wednesday.

 

 

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.