Investing.com – US oil prices edge lower on Wednesday as traders weighed a ceasefire between Israel and Hezbollah and an unexpected drop in US oil inventories ahead of Sunday’s OPEC+ meeting.
At 2:30 PM ET (1930 GMT), the price rose 0.03% to $68.72 per barrel and fell 10.1% to settle at $38.72 per barrel.
The ceasefire between Israel and Hezbollah in pictures
Oil prices have rebounded to some extent from their losses over the past two sessions, after media reports initially suggested a ceasefire between Israel and Hezbollah was near.
US President Joe Biden announced the ceasefire on Tuesday, agreeing that Israeli forces will withdraw from Lebanon within 60 days, while Hezbollah will withdraw its forces from the area between the ‘Blue Line’, the unofficial border between Lebanon and Israel. .
The deal marks a de-escalation of the Middle East conflict after 13 months of intense fighting, although hostilities between Israel and Hamas are still expected to continue in Gaza.
Still, the deal with Hezbollah has allayed some concerns that continued fighting in the Middle East will disrupt oil supplies from the oil-rich region.
That said, there will still be some risk premium in crude oil markets following an escalation of the war between Russia and Ukraine last week, which saw investors fear possible disruptions to crude production in Moscow.
US oil inventories are falling more than expected
The report said Wednesday that oil inventories fell by about 1.8 million barrels in the week ended Nov. 22, compared with an estimate of a decline of about 1.3 million barrels.
This data added to hopes that U.S. fuel demand remained strong even as the holiday season came to an end, and that oil supplies will tighten in the coming months.
OPEC+ meeting looms
Activity in crude oil markets is expected to be muted for the rest of the week as the US celebrates Thanksgiving on Thursday, resulting in generally quiet trading on Friday.
Attention now turns to a meeting of the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, in early December.
According to a Reuters report, the group of top producers is discussing a further postponement of the oil production increase planned for January.
The group, which produces about half the world’s oil, had aimed to gradually ease production cuts through 2024 and 2025, but weaker global demand and rising production outside OPEC+ have thrown that plan into doubt.
“Prices continue to face strong resistance around $75 per barrel due to demand concerns. Any premature production increase from the group could push the market into greater oversupply,” ING analysts said in a note.
(Peter Nurse, Ambar Warrick contributed to this article.)
