Oil prices tick higher as attention turns to OPEC+ decision on crude production

MW Oil prices tick higher as attention turns to OPEC+ decision on crude production

By William Watts

Industry data shows drop in U.S. crude inventories, rise in fuel stocks

Oil futures edged higher Wednesday, finding a footing after a cease-fire between Israel and Iran-backed Hezbollah eliminated much of the remaining risk premium around a wider Middle Eastern conflict, leaving traders to turn their attention to a weekend meeting of the Organization of the Petroleum Exporting Countries and its allies.

U.S. inventory data is also in focus after an industry group said crude stocks fell last week. U.S. trading may be thin ahead of the Thanksgiving Day holiday on Thursday.

Price moves

-- West Texas Intermediate crude CL00 for January delivery CL.1 CLF25 rose 20 cents, or 0.3%, to $68.97 a barrel on the New York Mercantile Exchange.

-- January Brent crude BRNF25, the global benchmark, was up 18 cents, or 0.2%, at $72.99 a barrel on ICE Futures Europe. The more actively traded February contract BRN00 BRNG26 rose 19 cents, or 0.3%, to $72.51 a barrel.

Market drivers

Oil futures are steadying after back-to-back losses that came in response to reports an Israel-Hezbollah cease-fire deal was in the works, easing at least for now once source of geopolitical tension. Crude had rallied last week as tensions between the West and Moscow intensified over the Ukraine-Russia war.

Meanwhile, attention has turned to a Sunday meeting of OPEC+ ministers. In early November, OPEC+ said it would extend 2.2 million barrels a day of voluntary production cuts to the end of December. That meant it would delay a gradual increase in output that had been expected to start in the final month of this year.

Meanwhile, calls by President-elect Donald Trump and proposed cabinet members to significantly boost U.S. crude production pose a potential threat to OPEC+ market share, though skeptics question how quickly or how much U.S. producers are likely to increase output.

"If OPEC+ does not return barrels to market now and try to recapture market share from producers in the Western Hemisphere including the U.S., Canada, Brazil, and Guyana, then when will they make their move?" said Robert Yawger, executive director for energy futures at Mizuho Securities, in a note.

Read: Trump's oil-drilling plans may pose a big problem for OPEC+

The American Petroleum Institute late Tuesday reported a 5.9 million barrel fall in U.S. crude inventories last week, according to a source citing the data, with gasoline stocks up 1.8 million barrels, and distillates, which include diesel fuel and heating oil, up 2.5 million barrels.

Official data from the Energy Information Administration is due Wednesday morning. Analysts surveyed by S&P Global Commodity Insights, on average, look for crude inventories to show a drop of 400,000 barrels in the week ended Nov. 22.

-William Watts

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November 27, 2024 06:50 ET (11:50 GMT)

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