Oil rises ahead of OPEC+ decision; Israel-Lebanon tensions provide support: Brent near $93/bbl

international crude oil prices They rose more than 1.5 percent on Tuesday, December 3, ahead of an output policy decision by a meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+). Investors also valued the fragile ceasefire between Israel and Lebanon, which provided additional aid.

global benchmark brent crude futures US West Texas Intermediate (WTI) crude was last up $1.16, or 1.6 per cent, at $72.99 a barrel, while US West Texas Intermediate (WTI) crude was up $1.16, or 1.7 per cent, at $69.26. The future price of crude oil in the domestic market was last trading 2.94 percent higher. 5,949 per barrel on the Multi-Commodity Exchange (MCX).

Also read: Goldman Sachs forecasts Brent crude to average around $80/bbl in 2024

Oil prices rise ahead of OPEC+ decision

-According to news agency Reuters, OPEC+ may extend its latest round of oil production cuts until the end of the first quarter. OPEC+, which accounts for about half of the world’s oil output, is considering gradually reducing production cuts through 2025.

-This OPEC+ alliance to finalize plans in an online meeting On Thursday. However, the prospect of an oil market surplus has put downward pressure on prices, with Brent trading around six percent below its December 2023 average.

-Goldman Sachs analysts believe an extension of OPEC+ production cuts through April is likely, given increased compliance with production cuts from Russia, Kazakhstan and Iraq, low Brent price levels and signals in press reports.

-Flaws keep emerging in the ceasefire between Israel and Hezbollah in the Middle East. Israel threatened on Tuesday to return to the war in Lebanon if its ceasefire with Hezbollah is broken, following the deadliest day since a ceasefire was agreed last week.

Also read: Chinese buyers soak up unsold oil as Iranian crude flows slow

-Analysts said renewed tensions in Lebanon, as well as a three-month extension of OPEC+ production cuts expected by market participants, were pushing prices higher. The outlook for global oil demand remains weak, and China’s crude imports are likely to peak early next year as demand for transportation fuels begins to decline.

Saudi Arabia, the world’s top exporter, is expected to cut crude oil prices to Asian buyers to their lowest level in at least four years. Still, implied volatility estimates for crude oil have fallen to their lowest in nearly two months as futures have been stuck in a range around $6 since mid-October.

-At home, Rajya Sabha on Tuesday passed a bill which provides for amendment in the law Regulating oil and gas exploration and production and separating petroleum operations from mining operations to promote investment in the sector.

-The Oil Sector (Regulation and Development) Amendment Bill, 2024, introduced in the Rajya Sabha in August this year, was passed by voice vote. Oil Minister Hardeep Singh Puri, replying to the debate on the bill, said the oil and gas sector involves high investment and long growth period.

Also read: Iran official says OPEC has little scope to restore oil supplies

Where are oil prices going?

Crude oil traded sharply higher in international markets ahead of the OPEC+ meeting and US weekly inventory data. Prices initially rose after positive Chinese factory activity data but were later offset by a bounce in the US dollar index.

The US dollar index recovered from a two-week low on concerns over France’s sovereign debt crisis and former President Donald Trump’s threat to impose higher tariffs on BRICS countries if they adopt the alternative currency for global trade.

“We expect crude oil prices to remain volatile this week, influenced by fluctuations in the dollar index and developments at the OPEC+ meetings. Crude oil finds support at $67.30-$66.80, while resistance lies at $68.65-$69.25. Crude oil has support in Indian Rupee 5,725- With resistance at 5,670 5,845- 5,910,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.