By Nicole Jao
NEW YORK (Reuters) -Oil futures fell almost 2% on Wednesday as investors awaited an impending OPEC+ decision on production cuts, while a bigger-than-expected drawdown in inventories provided some support to prices last week.
futures fell $1.31, or 1.78%, to settle at $72.31 a barrel. U.S. West Texas Intermediate crude futures fell $1.40, or 2%, to $68.54.
On Tuesday, Brent posted its biggest gain in two weeks, up 2.5%.
The market was tense and investors focused on the upcoming OPEC+ meeting, analysts said.
The Organization of the Petroleum Exporting Countries and its OPEC+ allies are meeting on Thursday and are likely to extend production cuts until the end of the first quarter of next year, industry sources told Reuters.
“While a delay in phasing out production cuts is expected, the rhetoric from the meeting will have the biggest impact,” said Matt Smith, chief U.S. oil analyst at Kpler.
OPEC+ wants to gradually reduce supply restrictions next year.
A single bank sold a large quantity of U.S. oil futures contracts in early afternoon trading on Wednesday, a source told Reuters, sending prices tumbling more than 1% within minutes and leaving traders scrambling to decipher the reason.
U.S. crude inventories fell more than expected last week as refineries ramped up operations, the Energy Information Administration (EIA) said. Gasoline and distillate inventories rose more than expected during the week.
“A pop in refining activity with runs climbing to highs not seen since the summer has resulted in a see-saw of drawing crude inventories and building products,” Smith said.
The bullish momentum only provided some support to prices.
A shaky ceasefire between Israel and Hezbollah, South Korea’s limited imposition of martial law and a rebel offensive in Syria that threatens to draw troops from several oil-producing countries have all buoyed oil prices, Priyanka says Sachdeva, senior market analyst at Phillip Nova. .
In the Middle East, Israel said on Tuesday it would return to war with Hezbollah if their ceasefire collapsed and that attacks would push deeper into Lebanon and target the state itself.
In South Korea, lawmakers introduced a bill to oust President Yoon Suk Yeol following his declaration of martial law on Tuesday, which was reversed within hours, sparking a political crisis in Asia’s fourth-largest economy.
