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Oil prices held steady at one-month lows after recent declines, as markets weighed prospects of a ceasefire between Israel and Hezbollah and rising crude output from OPEC+ against concerns over U.S. fuel stocks and demand uncertainty. Brent crude rose by 0.8% to $71.70 per barrel, while U.S. West Texas Intermediate (WTI) crude increased by 0.9% to $67.83 per barrel.
Geopolitical Tensions Easing
The recent price slump is partly due to speculation that a diplomatic resolution in Lebanon could be near, with Israeli and U.S. officials reportedly optimistic about a ceasefire deal within weeks. Talks involving Israel’s military and intelligence leaders have raised hopes for an end to the hostilities with Hezbollah, a development that could reduce the geopolitical risk premium on oil.
OPEC+ Output Increases
Adding to market pressures, OPEC+ is set to increase its production by 180,000 barrels per day in December, although it continues to maintain significant output cuts of 5.86 million barrels per day, or around 5.7% of global demand. This cautious output increase reflects OPEC+’s aim to balance market stability with current demand levels.
U.S. Fuel Stock Data and Demand Concerns
Meanwhile, data from the American Petroleum Institute showed a surprising decline in U.S. crude stocks last week by 573,000 barrels, contrary to analysts’ expectations of a 2.2 million-barrel increase. Official government data, due later on Wednesday, is expected to provide further insights into U.S. stockpiles. However, traders remain wary of demand signals from China, with markets awaiting potential stimulus measures to support economic growth.
Impact of U.S. Election Expectations on Oil
Investor sentiment has also been influenced by expectations for the upcoming U.S. presidential election. A potential Trump victory, which could result in higher U.S. oil output due to his pro-energy stance, is seen by some analysts as a factor that could limit the upside potential for oil prices.
As markets remain focused on demand concerns and geopolitical developments, oil prices are likely to respond closely to these evolving factors.
