Oil hovers at one-month low with supply drivers back in focus

Source: Reuters.

Brent crude futures gained 38 cents, or 0.5%, to $71.50 a barrel by 0451 GMT. US West Texas Intermediate crude futures rose 43 cents, or 0.6%, to $67.64 per barrel.

Prices fell for a second straight session on Tuesday, 29 October 2024 when an Axios reporter said on X that Israeli Prime Minister Benjamin Netanyahu would hold an imminent meeting with several ministers, the heads of the military and intelligence community about talks on a diplomatic solution to the war in Lebanon.

A deal that would end the fighting between Israel and Hezbollah could be achieved within a few weeks, Israeli and US officials said, according to Axios.

"A hefty plunge in oil prices since the start of the week may call for an attempt to stabilise in today’s session, but overall gains remain limited, given the lack of bullish catalysts to drive a more sustained up-move," said IG market strategist Yeap Jun Rong in an email.

"A ceasefire deal in the Middle East is on the table, which reduces the risks of a wider escalation impacting oil production, while we still have OPEC+ unwinding of production cuts on the horizon," he added.

OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies such as Russia, is scheduled to raise output by 180,000 barrels per day in December. The group has cut output by a total of 5.86 million bpd, equivalent to about 5.7% of global oil demand.

Attention in oil markets was likely to shift back to OPEC, given the planned output raise from December, while weak demand in China would also be in focus, ANZ analysts said in a client note.

Meanwhile, US crude oil and fuel stocks fell last week, market sources said on Tuesday, citing American Petroleum Institute figures. [API/S]

Crude stocks dipped by 573,000 barrels in the week ended 25 October, the sources said on condition of anonymity. Gasoline inventories lost 282,000 barrels, and distillate stocks fell by 1.46 million barrels, the sources said.

Nine analysts polled by Reuters had expected a 2.2 million-barrel rise in crude inventories.

Official US government data is scheduled to be released later on Wednesday.