The oil prices increased on Wednesday, as investors assessed their impact on a recent ceasefire agreement between Israel and Hezbollah and the upcoming OPEC+ meeting on Sunday.
In a recent report, Arslan A. Ali, an analyst with Fxempire said that investors are currently assessing the impact of a possible ceasefire on a region rife with conflict.
The price of West Texas Intermediate Crude Oil on the New York Mercantile Exchange at the time this article was written, had increased by 0.4%. Brent crude oil at the Intercontinental Exchange is $72.58 per barrel, up also 0.4% since the previous closing.
The benchmarks fell on both sides after incumbent US president Joe Biden revealed that Israel and the militant group Hezbollah based in Lebanon had reached a ceasefire agreement.
Carsten Fritsch is a commodity analyst with Commerzbank AG.
There hasn’t been a shortage of oil on the market due to conflict in the Middle East. A ceasefire would also help to ease the conflict that is still raging between Israel and Iran. This could disrupt the oil supply.
Trump’s Tariff Threats: Impact
On Monday, Donald Trump, the US president-elect, said in a post on social media that he planned to increase tariffs against China, Mexico, and Canada.
Trump announced that the US would be imposing a tariff of 25% on all goods imported from Canada or Mexico. China would face an additional 10% on top of the 60% tariff already proposed.
Tariff increases could increase global trade frictions, especially between China and the US. Beijing hinted at the possibility of retaliation with its own tariffs.
Analysts at ING Group wrote in a report that new tariffs on energy could increase the price of crude oil in the US, as Canada is a major supplier of these products.
A tight supply from the external market could also lead to increased investments in shale-drilling, which may increase domestic production.
OPEC meeting is in the spotlight
The ministerial gathering of the Organization of the Petroleum Exporting Countries (OPEC) and its allies will be eagerly anticipated by investors on Sunday.
The cartel, along with its partners, is expected to make a final decision at the meeting on the output policy for the period beyond 2024.
Market participants expect the group to continue its steep voluntary production reductions, set to expire by the end of the month.
According to IEA predictions, OPEC+ is planning a gradual production increase from January. However, this will lead to a significant oversupply in the coming year.
Commerzbank AG is of the opinion that OPEC+ could extend its production cut.
The cartel’s output reductions would support prices. Prices have been falling in recent months due to a lack of demand, and fears about an oversupply without OPEC barrels.
Oil price forecast
WTI is a price that has a resistance around $70.28 / barrel. The price could be a sign of a positive momentum if it moves towards this level.
The 50-day moving average and the 200-day exponential moving mean at $69.42 apiece and $69.52 apiece could provide further resistance.
The support is at $68.01 a barrel. This is followed by $67.28 per barrel.
Ali from Fxempire said that traders need to closely monitor the price movement around pivot $68.93 for more directional clues.
Brent crude remains resistant at $73.73 a barrel, while support is at $71.58 per barrel.
Ali said: “A move below $71.58 would signal a continued negative sentiment. A move above $72.50, however, could shift the bias in favor of bulls.”
The post Oil Prices Stabilize as Traders Eye OPEC+ Meeting for Further Cues could be updated as new information is released.
