Dec 5 2024: Oil prices remained steady on Thursday as markets awaited a pivotal OPEC+ meeting to determine future production levels, while geopolitical tensions in the Middle East added to the cautious sentiment.
By 0730 GMT, Brent crude had gained 5 cents (0.07%) to reach $72.36 per barrel, and U.S. crude rose by 6 cents (0.09%) to $68.60 per barrel. This stability followed a nearly 2% drop on Wednesday, attributed to a significant selloff of U.S. oil futures contracts by a single bank, according to sources familiar with the matter.
OPEC+ is expected to extend its current production cuts by at least three months starting in January, according to sources. The group has delayed phasing out supply reductions amid fluctuating market conditions, aiming to support prices while managing its market share.
“Investors are keen to see whether OPEC+ will prioritize price stabilization by maintaining output cuts or shift to defending its global market share by easing restrictions,” said Satoru Yoshida, a commodity analyst at Rakuten Securities.
Analysts predict the oil market could strengthen by year-end, bolstered by expectations of a U.S. economic recovery under the Trump administration and ongoing tensions in the Middle East. However, uncertainty surrounding OPEC+’s decision kept prices from gaining significant momentum.
“With the decision pending, some investors are hedging against the possibility of disappointment,” noted Yeap Jun Rong, a market strategist at IG. “The challenges of balancing supply cuts against potential production increases under a Trump administration in 2025 further complicate OPEC+’s strategy.”
Adding to market dynamics, U.S. crude inventories saw a sharper-than-expected decline last week as refiners ramped up operations. Meanwhile, gasoline and distillate stockpiles increased more than anticipated, according to data from the Energy Information Administration (EIA).
In the Middle East, tensions remain high as Hezbollah, weakened by Israeli military action, poses a potential long-term threat as it rebuilds its arsenal. Israeli officials warned of deeper military engagement in Lebanon should the current truce with Hezbollah collapse.
On the diplomatic front, President-elect Donald Trump’s Middle East envoy has initiated talks in Qatar and Israel to facilitate a ceasefire in Gaza and secure a hostage release deal before Trump assumes office on January 20, according to sources briefed on the discussions.
