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Oil prices stabilised on Wednesday, with Brent crude futures rising slightly by $0.05 to $72.86 per barrel and U.S. West Texas Intermediate (WTI) crude edging up by $0.03 to $68.80 as of 0415 GMT.
Picture: Crude oil stabilises near $68.85 after a volatile session, with traders eyeing resistance at $69.00, as seen on the VT Markets app.
Looking at the chart, we’re seeing a period of volatility, with a decline to a low of $68.04, followed by a recovery to close near $68.85. The MACD histogram indicates bearish momentum is fading, as the bars have begun to approach the zero line, hinting at a potential shift in sentiment.
This follows a decline on Tuesday, attributed to the announcement of a ceasefire agreement between Israel and Hezbollah. Market participants are now assessing the ceasefire’s durability and its potential impact on geopolitical stability in the oil-producing region.
The ceasefire, brokered by the United States and France, is set to take effect on Wednesday. While Israeli Prime Minister Benjamin Netanyahu pledged adherence to the deal, he also warned of a forceful response to any violations by Hezbollah.
Traders remain cautious, with Hiroyuki Kikukawa of NS Trading forecasting WTI to trade in the $65-$70 range, factoring in weather conditions, potential U.S. shale production increases under Donald Trump’s incoming administration, and China’s demand trends.
See also: Gold Edges Higher as Traders Eye Fed Rate Clues
Attention is also turning to Sunday’s OPEC+ meeting, where the group will decide whether to defer a planned oil output hike scheduled for January. OPEC+ sources suggest a delay could be on the table due to sluggish global demand and rising output outside the group.
The producer alliance, responsible for half of the world’s oil supply, had originally planned gradual increases in 2024 and 2025 to unwind production cuts. Citi Research analysts noted that delaying these increases until April could support market balance amid potential supply disruptions or improving demand.
The U.S. market also provided fresh data on crude inventories. The American Petroleum Institute (API) reported a sharper-than-expected draw in crude stocks, with a 5.94-million-barrel drop for the week ending 22 November, far exceeding the anticipated 600,000-barrel decline.
However, fuel inventories rose, reflecting complex supply-demand dynamics in the energy market.
Adding further uncertainty, President-elect Donald Trump reiterated plans to impose a 25% tariff on imports from Mexico and Canada, potentially including crude oil. Such measures could disrupt cross-border trade flows and pressure crude prices, particularly for WTI.
As oil stabilises, traders will closely monitor developments from the OPEC+ meeting, potential geopolitical flare-ups, and the release of official U.S. inventory data later in the week. These factors will likely influence whether oil prices maintain their current range or face renewed volatility.
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