Oil prices steady amid Israel-Lebanon tensions, US inventory build
2024.12.03 21:55
Investing.com– Oil prices steadied in Asian trade on Wednesday after rising sharply in the prior session as Israel threatened to attack Lebanon if its ceasefire with Hezbollah collapses.
But oil’s momentum was stalled by industry data showing an unexpected increase in U.S. oil inventories. Sentiment also remained largely skittish before an OPEC+ meeting on Thursday, where the cartel is widely expected to further delay plans to increase production.
Still, oil retained some risk premium as Israel and Hezbollah repeatedly violated a recently announced ceasefire. Heightened tensions between Russia and Ukraine also kept traders on edge.
expiring in February fell 0.1% to $73.58 a barrel, while fell 0.1% to $69.50 a barrel by 20:51 ET (01:51 GMT). Both contracts surged over 2% on Tuesday.
Israel-Lebanon tensions in focus amid ceasefire violations
Oil was buoyed by heightened tensions in the Middle East after Israel threatened to attack the Lebanon state if its ceasefire with Hezbollah fell through.
The threat came as Israel and Hezbollah both launched strikes against each other despite agreeing to a U.S.-brokered ceasefire last week.
Israeli Defence Minister Israel Katz threatened to hold Lebanon responsible for not disarming Hezbollah.
The recent strikes and rhetoric suggested that last week’s ceasefire may not hold, presenting the prospect of heightened tensions in the Middle East and keeping oil’s risk premium in play.
US inventories grow more than expected- API
Data from the showed U.S. oil inventories grew 1.2 million barrels (mb) in the week to November 29, compared to expectations for a draw of 2.1 mb.
The reading pushed up some concerns that demand in the world’s biggest fuel consumer was easing, especially with the advent of the winter season.
The API data usually heralds a similar reading from , which is due later on Wednesday. Any signs of increasing U.S. inventories point to less tight supplies.
OPEC+ meeting awaited for supply cues
Market focus was also on a meeting of the Organization of Petroleum Exporting Countries and allies (OPEC+) on Thursday, where the cartel is widely expected to further delay plans to increase production.
The OPEC+ has steadily cut its outlook for oil demand in 2024 and 2025, citing concerns over slowing growth in top importer China.
Any extension in the OPEC’s ongoing supply cuts are likely to buoy oil prices going into 2025 by tightening markets.
