Oil prices supported by OPEC production cuts

Oil prices remained firm on Tuesday, with WTI price hovering close to the $68.6 per barrel mark. If oil prices retreat, they may encounter support near $66.9 per barrel, while resistance may be found near $70.6 per barrel.

OPEC+ announced last week that it will extend its voluntary production cuts until the end of the first quarter of 2025, boosting oil prices temporarily. Oil prices have been under pressure and the cartel is limiting production in an attempt to raise oil prices. 

The civil war in Syria was rekindled last week, further destabilizing the region. In a surprise offensive, Syrian rebels have captured Damascus and toppled the government. President Bashar al-Assad has been forced to flee the country and according to recent reports he has asked for Asylum in Moscow. The Syrian rebel army is currently in charge and political instability in Syria is reigniting geopolitical risks, boosting oil prices.

Meanwhile, concerns of a broadening conflict in the Middle East have been boosting oil prices in the past year. A 60-day ceasefire between Israel and Lebanon has been officially declared, putting pressure on oil prices. Israel, however, is continuing attacks in the Gaza area. In addition, the situation between Russia and Ukraine remains critical, with Russian President Vladimir Putin stating that Russia may use its new nuclear-capable missiles against Ukraine.

Oil prices are kept in check by high central banks’ interest rates. Market odds of a December rate cut rose to 90% after the release of robust US labor data on Friday, boosting oil prices.

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Written by:
Myrsini Giannouli

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