Oil prices supported by steep draw in US stockpiles

Oil prices remained firm on Wednesday and WTI price oscillated around $68.9 per barrel. If oil prices retreat, they may encounter support near $66.9 per barrel, while resistance may be found near $71.7 per barrel.

US crude oil inventories released on Wednesday showed an unexpected drop in US crude stockpiles, boosting oil prices. The US Energy Information Administration reported a weekly crude stockpile draw of 1.8M barrels for the week to November 22, against expectations of a 1.3M barrel draw and following a rise of 0.5M barrels the week before.

Tensions between Russia and Ukraine flared last week boosting oil prices. The crisis between Russia and Ukraine started to de-escalate this week, however, leading to a drop in oil prices. 

Concerns of a broadening conflict in the Middle East have boosted oil prices in the past year. Geopolitical tensions cooled this week, leading to a drop in safe-haven demand. A 60-day ceasefire between Israel and Lebanon was officially declared on Wednesday. The deal will hopefully lead to discussions of a peace treaty and the deal will hopefully put an end to the 14-month conflict and has the potential to restore stability in the Middle East.

Focus this week will be on the OPEC+ meeting on Saturday, December 1st. Comments from members of the OPEC+ consortium this week are likely to cause volatility in oil prices. OPEC’s December meeting holds special interest, as the organization is expected to announce its output plans for the year ahead. With a lull in geopolitical tensions causing oil prices to drop, traders will be waiting for an extension of OPEC’s oil production cuts into 2025. 

Oil prices are kept in check by high central banks’ interest rates. Market odds of a December rate cut rose to approximately 70% on Wednesday, boosting oil prices.

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Written by:
Myrsini Giannouli

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