Investing.com — Oil prices rose slightly on Wednesday, continuing the previous session’s sharp gains on heightened geopolitical tensions and signs of a weakening U.S. labor market.
At 09:00 ET (14:00 GMT), the price rose 0.5% to $74.01 per barrel, and rose 0.5% to $70.32 per barrel.
Both contracts rose more than 2% on Tuesday.
Tensions between Israel and Lebanon have taken center stage amid ceasefire violations
Oil was buoyed by increased tensions in the Middle East after Israel threatened to attack the Lebanese state if the ceasefire with Hezbollah did not go through.
The threat came as Israel and Hezbollah both launched attacks against each other despite agreeing to a US-brokered ceasefire last week.
Israeli Defense Minister Israel Katz threatened to hold Lebanon responsible for failing to disarm Hezbollah.
The recent strikes and rhetoric suggested that last week’s ceasefire might not hold. This raises the prospect of increased tensions in the Middle East and keeps the oil risk premium in play.
U.S. private payroll growth is slowing
U.S. private payroll growth slowed in November, raising hopes of another Federal Reserve rate cut later this month that could boost economic activity in the world’s biggest energy consumer.
jobs rose by 146,000 last month, after rising by a downwardly revised 184,000 in October, the ADP National Employment Report showed on Wednesday.
Economists had forecast that private employment would increase by 166,000 jobs, following a previously reported increase of 233,000 in October.
The ADP report was released ahead of Friday’s more comprehensive and closely watched employment report from the Labor Department’s Bureau of Labor Statistics.
Financial markets estimate a roughly 70% chance of a quarter-percentage-point rate cut by the Federal Reserve this month, which would bring the policy rate to a range of 4.25%-4.50%.
They’re betting on two more rate cuts by the end of next year, a slower pace than Fed officials forecast in September, but further signs of a dramatic slowdown in labor market cuts have further cuts on the horizon .
US Oil Stocks Grow – API
However, oil’s momentum was halted by industry data showing an unexpected rise in US oil inventories.
Oil inventories data showed increased by 1.2 million barrels (mb) in the week to November 29, compared with expectations for a decline of 2.1 mb.
These figures raised some concerns that demand from the world’s largest fuel consumer was declining, especially with the arrival of the winter season.
The API details precede , which will be released later on Wednesday.
OPEC+ meeting awaited supply cues
The market focus was also on a meeting of the Organization of the Petroleum Exporting Countries and Allies (OPEC+) on Thursday, where the cartel is widely expected to further delay plans to increase production.
OPEC+ has steadily lowered its outlook for oil demand in 2024 and 2025, amid concerns about slowing growth from top importer China.
Any extension of OPEC’s ongoing supply cuts is likely to boost oil prices in 2025 by tightening markets.
(Ambar Warrick contributed to this article.)
