Crude oil prices were stable on Wednesday, due to an expectation from the market, regarding ceasefire agreement between Israel and Hezbollah. The ceasefire expectations were aligned with anticipation of OPEC+ meeting on Sunday, where the oil producing nations could delay a planned increase in oil output.
Brent crude futures showed an upward movement of 32 cents, or 0.44 per cent to $73.13 per barrel. US West Texas Intermediate crude was up by 33 cents, or 0.48 per cent at $69.10. However, both of the benchmarks touched a low on Tuesday after Israel agreed to the ceasefire agreement with Lebanon’s Hezbollah. The agreement brokered by the U.S. and France was accepted by both Israel and Iran-backed Hezbollah on Wednesday.
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“The ceasefire between Hezbollah and Israel brokered by France and US for next 60 days effective from Wednesday onwards and news of Hamas extending hands for ceasefire with Israel is positive for the world economy, but oil prices are likely to move down. The risk premiums in WTI and Brent already vanished as the counter trade at $69 and $72 respectively and are down 3.7% for the week so far, on back of the recent developments but prices may find some support from OPEC+ plans to extend production cuts until January or further in 2025 to keep the global crude oil market in balance,” said Mohammed Imran, Research Analyst, Sharekhan by BNP Paribas.
Heads of commodities research at Goldman Sachs and Morgan Stanley said that oil prices are undervalued, citing a market deficit and risk to Iranian supply from possible sanctions under U.S. President-elect Trump.
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“The calmness seen in the price action and lack of trending conditions suggests oil traders see the OPEC+ meeting as a lower volatility affair, with the group likely to swing to an almost unanimous call to hold off from unwinding its 2.2 million barrels a day voluntary cuts until Q1 2025,” said Chris Weston, head of research at Pepperstone
In the United States, Trump announced plans to impose a 25 per cent tariff on all imports from Mexico and Canada,
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