By Georgina McCartney
HOUSTON (Reuters) -Oil prices fell lower on Tuesday, extending the previous day’s losses in choppy trading after Israel agreed to a ceasefire with Hezbollah, cutting oil’s risk premium.
futures fell 20 cents, or 0.27%, to $72.81 a barrel. U.S. West Texas Intermediate crude futures settled at $68.77 a barrel, down 17 cents, or 0.25%.
The deal between Israel and the armed group Hezbollah was expected to enter into force on Wednesday, US President Joe Biden said.
Israeli Prime Minister Benjamin Netanyahu said he was ready to implement a ceasefire and would “respond strongly to any violation” by Hezbollah.
On Monday, oil prices fell more than $2 after multiple reports that the warring sides had agreed to terms for a ceasefire.
A ceasefire could put pressure on crude oil prices as the US government would likely ease sanctions on oil from Iran, Hezbollah supporter StoneX analyst Alex Hodes said in a note.
OPEC+ EYE OUTPUT DELAY
Both benchmarks briefly rose more than $1 per barrel during the session.
“We popped and fell around the time news broke of the resumption of OPEC talks,” said Phil Flynn, senior analyst at Price Futures Group.
OPEC+ countries are discussing a further postponement of the planned oil production increase that was due to start in January, two sources from the producer group said, ahead of Sunday’s meeting to set policy for early 2025.
The group pumps about half the world’s oil and had planned to gradually reverse oil production cuts with small increases over many months in 2024 and 2025. But a slowdown in Chinese and global demand, and rising production outside the group, have put a dampener on that plan.
“There were still coals in the fire this morning as OPEC+ moved to delay production increases again and Trump’s tariffs, but they weren’t enough to support prices anywhere above $70 per barrel for WTI,” said Again Capital partner John Kilduff .
TRUMP RATES TO INCLUDE CRUDE OIL AND RESOURCES
Newly elected US President Donald Trump said he would impose a 25% tariff on all products entering the US from Mexico and Canada.
Crude oil would not be exempt from the trade penalties, two sources familiar with the plan told Reuters on Tuesday.
Maintaining the flow of energy products across U.S. borders with Mexico and Canada is critical, according to the main U.S. oil and gas lobby group, American Petroleum Institute.
The vast majority of the 4 million barrels of crude oil per day that Canada exports goes to the US. Analysts had said Trump was unlikely to impose tariffs on Canadian oil, which cannot be easily replaced because it is different from the types the U.S. produces.
Meanwhile, oil stocks fell while fuel stocks rose last week, market sources said, citing API figures on Tuesday.
Crude inventories fell by 5.94 million barrels in the week ended Nov. 22, the sources said on condition of anonymity. Gasoline stocks rose by 1.81 million barrels and distillate stocks by 2.54 million barrels, they said.
