Oil prices edge higher as geopolitical tensions and OPEC+ supply cuts loom
Shafaq News/ Oil prices firmed onWednesday as market participants weighed up geopolitical tensions and theprospect of OPEC+ extending supply cuts against weaker demand.
Brent crude futures rose 16 cents,or 0.2%, to $73.78 a barrel by 0440 GMT, while U.S. West Texas Intermediatecrude futures gained 14 cents, or 0.2%, to $70.08.
On Tuesday, Brent posted its biggestgain in two weeks, rising 2.5%.
A shaky ceasefire between Israel andHezbollah, South Korea's curtailed declaration of martial law and a rebeloffensive in Syria that threatens to draw in forces from several oil-producingcountries, all lent support to oil prices, said Priyanka Sachdeva, seniormarket analyst at Phillip Nova.
Oil markets, however, are largelydiscounting an abundantly supplied 2025 amid sluggish demand signals from theU.S. and China, the world's top two economies, she added.
"Weaker demand signals frommainland China are raising concerns about demand in the oil market ... Theworld's largest crude oil importer may struggle to maintain its significantshare of global demand by 2025."
Meanwhile in the U.S., crude oilinventories rose 1.2 million barrels last week, market sources said, citingdata from the American Petroleum Institute.
Gasoline inventory also rose, by 4.6million barrels, even though the week included Thanksgiving when demandtypically rises as families travel by car for holiday get-togethers.
Official data on oil stocks from theU.S. Energy Information Administration is due on Wednesday at 10:30 a.m. ET(1530 GMT). Analysts polled by Reuters expect a 700,000 barrel decline in crudeand a 639,000 barrel increase in gasoline.
Also supporting prices, theOrganization of the Petroleum Exporting Countries and allies, or OPEC+, willlikely extend output cuts until the end of the first quarter next year whenmembers meet on Thursday, industry sources told Reuters. OPEC+ has been lookingto gradually phase out supply cuts through next year.
"The main issue facing anyreturn of OPEC+ supply is that non-OPEC supply growth in 2025 is expected toeclipse the growth in global oil demand," said Commonwealth Bank ofAustralia analyst Vivek Dhar in a note.
"The International EnergyAgency expects non-OPEC supply growth, led by the U.S., Canada, Guyana andBrazil, to increase supply by 1.5 million barrels per day (bpd) next year.Global oil demand is only expected to lift about 1 million bpd as China's oildemand is expected to remain subdued."
In the Middle East, Israel said onTuesday it would return to war with Hezbollah if their truce collapses, and itsattacks would go deeper into Lebanon and target the state itself. The commentfollowed the deadliest day since Israel and Hezbollah agreed to a ceasefirelast week.
In neighbouring Syria, rebelsadvancing against government forces pushed close on Tuesday to the major cityof Hama, rebels and a war monitor said, after their surprise capture of Aleppolast week.
(REUTERS)
