LONDON: Oil prices were slightly firmer on Thursday ahead of an OPEC+ meeting later in the day, with investors awaiting the group's decision on supply cuts while also monitoring geopolitical tensions in the Middle East. Brent crude futures rose 39 cents, or 0.5%, to $72.70 a barrel by 0944 GMT, while U.S. crude futures were at $68.97 a barrel, up 43 cents, or 0.6%. Both benchmarks fell nearly 2% on Wednesday after a large volume of U.S. oil futures contracts were sold by a single bank in early afternoon trading, pushing prices down.
The Organization of the Petroleum Exporting Countries and its allies in OPEC+ are likely to extend their latest round of oil output cuts by at least three months from January, in an online meeting at 1100 GMT on Thursday, OPEC+ sources told Reuters, providing additional support for the oil market. OPEC+ has been considering phasing out supply cuts throughout next year, but has delayed taking action due to weaker-than-expected global demand, particularly from China.
"Market participants are closely watching to see if OPEC+ will focus on bolstering prices by extending production cuts, or opt to defend its share of the global crude oil market by easing those cuts," said Satoru Yoshida, a commodity analyst with Rakuten Securities. "The OPEC+ decision may prompt a short-term reaction, but the oil market is likely to rise by year-end on expectations of a U.S. economic recovery under the Trump administration and ongoing Middle East tensions," he added.
For now, the uncertainty kept prices from recovering. "As the production decision from OPEC+ awaits, there may be some de-risking as some investors price for the scenario that OPEC+ may disappoint," said Yeap Jun Rong, market strategist at IG. "I think it has become somewhat clear that OPEC+ hands are tied, and with a potential increase in oil production from a Trump Administration coming in 2025, their aim to prop up prices may be more challenging," Yeap said.
A larger-than-expected draw in U.S. crude stockpiles last week also provided some support to prices. In the Middle East, Israel said on Tuesday it would return to war with Hezbollah if their truce collapses, with attacks going deeper into Lebanon and targeting the state itself. Meanwhile, Donald Trump's Middle East envoy has traveled to Qatar and Israel to kick-start the U.S. President-elect's diplomatic push to help reach a Gaza ceasefire and hostage release deal before he takes office on Jan. 20, a source briefed on the talks told Reuters.— Reuters
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