Oil holds steady, focus on Israel-Hezbollah ceasefire

Oil prices held steady on Wednesday as markets evaluated a ceasefire deal between Israel and Hezbollah while also anticipating Sunday's OPEC+ meeting, where the group could delay a planned increase in oil output, reports Reuters.

Brent crude futures rose 33 cents, or 0.45 per cent, to $73.49 a barrel by 1300 GMT and US West Texas Intermediate crude was up 37 cents, or 0.54 per cent, at $69.14.

Both benchmarks settled lower on Tuesday after Israel agreed to a ceasefire deal with Lebanon's Hezbollah.

The ceasefire between Israel and Iran-backed Hezbollah came into effect on Wednesday after both sides accepted the agreement brokered by the US and France.

"Market participants are assessing whether the ceasefire will be observed," said Hiroyuki Kikukawa, president of NS Trading, part of Nissan Securities.

"We expect WTI to trade within the range of $65-$70 a barrel, factoring in weather conditions during the Northern Hemisphere's winter, a potential increase in shale oil and gas production under the incoming Donald Trump administration in the US and demand trends in China."

Heads of commodities research at Goldman Sachs and Morgan Stanley said that oil prices are undervalued, citing a market deficit and risk to Iranian supply from possible sanctions under US President-elect Trump.

Sources from the OPEC+ group comprising the Organisation of the Petroleum Exporting Countries and allies led by Russia have said the producer group is discussing a further delay to the oil output increase set for January.

The group, which produces about half the world's oil, had aimed to gradually ease production cuts through 2024 and 2025, but weaker global demand and rising output outside OPEC+ have cast doubt on that plan. The decision will be made at the Dec.1 meeting.

In America, Trump said that he would impose a 25 per cent tariff on all products coming into the US from Mexico and Canada. Crude oil would not be exempt from the trade penalties, sources told Reuters on Tuesday.

Meanwhile, US crude oil stocks fell and fuel inventories rose last week, market sources said on Tuesday, citing API figures.

Crude stocks fell by 5.94 million barrels in the week ended Nov. 22, exceeding analyst expectations of a drop of about 600,000 barrels.