By Emily Chow
SINGAPORE (Reuters) -Oil prices rose slightly on Wednesday, with markets weighing the potential impact of a ceasefire between Israel and Hezbollah and Sunday’s OPEC+ meeting in which the group could delay a planned increase in oil production. to estimate.
Brent crude futures rose 29 cents, or 0.4%, to $73.10 a barrel by 0750 GMT, and U.S. West Texas Intermediate crude rose 26 cents, or 0.4%, to $69, 03.
Both benchmarks were lower on Tuesday after Israel agreed to a ceasefire with Lebanese Hezbollah.
The ceasefire between Israel and the Iran-backed Hezbollah came into effect on Wednesday after both sides accepted the US-French-brokered deal.
The deal paved the way for an end to a conflict over the Israeli-Lebanese border that has killed thousands of people since it erupted last year in the Gaza war.
“Market participants are assessing whether the ceasefire will be adhered to,” said Hiroyuki Kikukawa, president of NS Trading, part of Nissan Securities.
“We expect WTI to trade within a range of $65-$70 per barrel, taking into account winter weather conditions in the Northern Hemisphere, a potential increase in shale oil and gas production under the incoming Donald Trump administration in the US and demand trends in China. “
Heads of commodity research at Goldman Sachs and Morgan Stanley said oil prices are undervalued, citing a market shortage and risk to Iranian supply from possible sanctions under newly-elected US President Donald Trump.
Sources from the OPEC+ group, made up of the Organization of the Petroleum Exporting Countries and allies led by Russia, have said the producer group is discussing a further delay in the increase in oil production that was due to start in January.
OPEC+, which meets on December 1 to set policy for early 2025, pumps about half the world’s oil and planned to gradually reverse oil production cuts in 2024 and 2025. But a slowdown in Chinese and global demand, as well as rising production outside the group, have undermined that plan.
“Our base case has long been for OPEC+ to delay phasing out production cuts through 2025,” analysts at Citi Research said in a note, adding that the taper could start in April instead of January.
“From the producer group’s perspective, delaying decommissioning could give the market the opportunity to be more balanced, via supply disruptions or more resilient demand, while bringing back barrels makes lower prices a foregone conclusion.”
In America, President-elect Trump said he would impose a 25% tariff on all products entering the US from Mexico and Canada. Crude oil would not be exempt from the trade fines, sources told Reuters on Tuesday.
Meanwhile, US crude inventories fell and fuel inventories rose last week, market sources said on Tuesday, citing API figures.
Crude oil stock prices fell 5.94 million barrels in the week ended Nov. 22, exceeding analyst expectations of a decline of about 600,000 barrels.
(Reporting by Yuka Obayashi in Tokyo and Emily Chow in Singapore; Editing by Jacqueline Wong, Lincoln Feast and David Goodman)
