Oil prices firmed slightly on Wednesday, with traders expecting OPEC+ to announce an extension to supply cuts this week while heightened geopolitical tensions continue to dominate market sentiment.
Brent crude futures were up 19 cents, or 0.26%, at $73.81 a barrel by 0916 GMT while US West Texas Intermediate crude futures rose 13 cents, or 0.19%, to $70.07. On Tuesday, Brent posted its biggest gain in two weeks, rising by 2.5%.
A shaky ceasefire between Israel and Hezbollah, South Korea’s curtailed declaration of martial law and a rebel offensive in Syria that threatens to draw in forces from several oil-producing countries all lent support to oil prices, said Priyanka Sachdeva, senior market analyst at Phillip Nova.
In the Middle East, Israel said on Tuesday that it would return to war with Hezbollah if their truce collapses and that its attacks would go deeper into Lebanon and target the state itself.
In South Korea, meanwhile, lawmakers have submitted a bill to impeach President Yoon Suk Yeol after his declaration of martial law on Tuesday, which was reversed within hours, sparking a political crisis in Asia’s fourth-largest economy.
However, the bullish momentum hasn’t pushed crude past the $75 resistance, indicating market sensitivity to geopolitical and economic developments may be waning, said Dilin Wu, research strategist at Pepperstone.
“With OPEC+ widely expected to extend its 2.2 million barrels per day voluntary production cut into the first quarter of 2025, prices are likely to stay range-bound unless a new catalyst emerges,” Wu said.
The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, are likely extend output cuts until the end of the first quarter next year when members meet on Thursday, industry sources told Reuters.
Oil prices rise ahead of OPEC+ meeting
OPEC+ has been looking to phase out supply cuts through next year. “Neither geopolitics and OPEC+ action nor sanguine financial data will alter the underlying fundamental outlook.
Protracted attempts to push oil towards $80 a barrel will be reined in by supply checks and loose oil balances,“ said PVM oil analyst Tamas Varga.
US, crude oil inventories rose 1.2 million barrels last week, market sources said, citing data from the American Petroleum Institute.
Gasoline stocks also rose, by 4.6 million barrels, even though the week included Thanksgiving, when demand typically rises. Official data on oil stocks from the US Energy Information Administration is due on Wednesday at 10:30 a.m. ET (1530 GMT).
Analysts polled by Reuters expect crude stocks to decline by 700,000 barrels and gasoline stocks to rise by 639,000 barrels.
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