Oil Prices Steady Ahead of OPEC+ Meeting and Middle East Cease-Fire Talks

Oil prices remained relatively steady as traders waited for updates on OPEC+ production plans and assessed the potential for a lasting cease-fire between Israel and Hezbollah, a militant group based in Lebanon. West Texas Intermediate (WTI) crude edged slightly lower, trading just under $69 per barrel after a couple of days of declines driven by the possibility of easing Middle East tensions. At the same time, Brent crude hovered just below $73 per barrel.

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The temporary truce between Israel and Hezbollah, which started on Tuesday, brought some relief to the market. However, comments from Israeli Prime Minister Benjamin Netanyahu, known for his strong stance on security, raised doubts about the truce's sustainability. This uncertainty added more volatility to the oil market as traders tried to weigh the situation.

OPEC+ Discussions and Potential Delays

OPEC+ is in the middle of talks about delaying its plans to increase oil production, with a major meeting set for this weekend. This has helped ease some worries about a possible oversupply in the market. Traders are closely watching these discussions as they look for signals about whether OPEC+ will stick to its planned output increase or hold back due to market concerns.

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US Crude Inventories and Trading Activity

In the U.S., crude stockpiles dropped by 1.84 million barrels, which was a smaller decrease than the 5.9 million-barrel drop that an industry group had anticipated earlier in the week. On the other hand, gasoline inventories rose by 3.31 million barrels, signaling more supply in the market.

Trading activity was lighter than usual, with many traders preparing for the U.S. Thanksgiving holiday. This led to open interest levels staying close to their monthly lows. Oil options markets reflected a shift in sentiment, with a lower perceived risk of further escalation in the Middle East. As a result, many bullish options expired without value on Tuesday, showing that the market's excitement had cooled.

Oil Market Trends and Potential Drivers

Oil prices have been stuck in a narrow range since early last month, influenced by a mix of positive and negative factors. Several key issues could drive the market's next major move. These include potential policy changes from a second Trump presidency, geopolitical risks related to Russian and Iranian oil supplies in the coming year, and what OPEC+ decides about production.

Citigroup analysts, including Eric Lee, shared their take on the market: “OPEC+ seems cautious about increasing production due to concerns over weak demand and the expectation that 2025 could see an oil surplus. However, deeper cuts don’t seem likely either, given that prices are still above $70 for Brent, global oil inventories are relatively low, and there are still geopolitical risks to consider.”

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