Oil prices stabilized on Wednesday as markets evaluated the ceasefire agreement between Israel and Hezbollah while also anticipating the OPEC+ meeting on Sunday where the group may postpone a scheduled increase in oil production.
Brent crude futures rose 38 cents, or 0.52%, to $73.19 a barrel, and US West Texas Intermediate crude rose 39 cents, or 0.57%, to $69.16.
Both benchmarks settled lower yesterday, Tuesday, after Israel agreed to a ceasefire agreement with Lebanese Hezbollah.
The ceasefire between Israel and Iran-backed Hezbollah entered into force on Wednesday after both sides accepted the agreement brokered by the United States and France.
Heads of commodity research at Goldman Sachs and Morgan Stanley said oil prices were undervalued, citing market deficits and risks to Iranian supplies from potential sanctions under US President-elect Trump.
Sources from the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries and allies led by Russia, said the producer group was discussing a further delay to increase oil production scheduled for January.
The group, which produces about half of the world’s oil, had aimed to gradually ease production cuts until 2024 and 2025, but weak global demand and rising production outside OPEC+ have cast doubt on that plan. The decision will be made at the December 1 meeting.
In America, Trump said he would impose a 25% tariff on all products coming to the United States from Mexico and Canada. Sources told Reuters on Tuesday that crude oil would not be exempt from trade sanctions.
Meanwhile, US crude oil inventories fell and fuel inventories rose last week, citing American Petroleum Institute figures.
Crude inventories fell by 5.94 million barrels in the week ending November 22, exceeding analysts’ expectations of a decline of about 600,000 barrels.
