Oil steadied as signs OPEC+ will once again delay restoring some output countered easing geopolitical risk after a cease-fire agreement between Israel and Hezbollah. Brent crude (BZ=F) was below $73 a barrel after losing about 3% in the prior two sessions on anticipation of a truce, while West Texas Intermediate (CL=F) held above $68. OPEC+ meets this weekend, and talks have begun to delay the oil production restart planned for January for several months on signs of a glut, according to delegates.
Israel started a cease-fire with the Lebanese militant group Hezbollah after weeks of talks mediated by the US. However, the two sides continued to attack each other in the hours before the agreement, highlighting their differences as they prepare to start negotiations for a permanent peace.
Crude has been caught in a tight range since the beginning of last month, buffeted by competing bullish and bearish signals. There’s a number of catalysts that may drive the market’s next move — including the policies of a second Trump presidency and geopolitical risks linked to Russian and Iranian supplies next year.
“We’re pretty fairly priced” with Brent between $70 and $75 a barrel, said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp.“It’s pretty much a done deal that OPEC+ will agree to roll over the current production cuts through the first quarter.”
The American Petroleum Institute reported US crude inventories shrank by 5.9 million barrels last week, which would be the biggest drop since August if confirmed by government figures later Wednesday.
Elsewhere, a Canadian petroleum industry group said that President-elect Donald Trump’s proposed tariffs, which may include nearly 4 million barrels of Canadian crude imports, would result in higher gasoline and energy costs for US consumers.
