Oil prices dipped slightly on Friday and were on track for a weekly decline, driven by expectations of reduced tensions in the Middle East, with attention shifting to an upcoming OPEC+ meeting.
Crude oil faced pressure following the announcement of a ceasefire between Israel and Lebanon, though the durability of this truce remains uncertain.
Increased tensions between Russia and Ukraine, resulting from a series of damaging strikes on Kyiv, provided some support for crude prices, but overall trading volumes were subdued due to the U.S. Thanksgiving holiday. Brent crude futures for January fell by 0.1 percent to $73.21 per barrel, while West Texas Intermediate (WTI) crude futures stabilized at $69.10 per barrel as of 21:19 ET (02:19 GMT).
Anticipation of OPEC+ meeting
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are scheduled to convene next week. Reports indicate that the meeting, originally set for December 1, has been postponed to December 5 and will be conducted virtually.
Potential production delays
Additional reports suggest that the cartel is likely to further delay plans to increase production during this upcoming meeting, in light of the persistent weakness in oil prices. The slowing demand from China, the top oil importer, has raised concerns for OPEC+, prompting the group to continuously revise its oil demand forecasts for the upcoming year.
Weekly losses driven by ceasefire
Brent and WTI prices have each dropped approximately 3 percent this week, as traders adjusted for a diminished risk premium following the ceasefire agreement between Israel and Lebanon. This truce reduces the likelihood of oil supply disruptions in the Middle East, even as Israel continues military operations in Gaza.
Meanwhile, tensions between Russia and Ukraine remain elevated following extensive Russian strikes targeting Ukraine’s power infrastructure.
Inventory data and market reactions
On Thursday, oil prices showed minimal changes after U.S. inventory data presented a mixed picture regarding supplies, while easing Middle Eastern tensions contributed to a reduction in oil’s risk premium. Crude prices have faced downward pressure this week following the ceasefire between Israel and Lebanon. However, Israel has persisted with its military actions in Gaza, complicating hopes for increased regional stability.
A weaker dollar helped to cushion overall losses in oil prices, while ongoing Russian-Ukrainian tensions kept certain risk factors in play. By 20:31 ET (01:31 GMT), January Brent oil futures slightly decreased by 0.1 percent to $72.78 per barrel, while WTI crude futures remained steady at $68.33 per barrel.
Government data released on Wednesday indicated that U.S. oil inventories dropped by 1.8 million barrels for the week ending November 22. Conversely, gasoline inventories rose by 3.3 million barrels, marking the second consecutive week of notable increases, alongside a rise in distillate stocks. These inventory builds have raised concerns over potential demand slowdowns in the U.S., the world’s largest fuel consumer, especially as winter approaches, typically a time for reduced travel.
Read more: Oil prices remain steady amid mixed U.S. inventory data, easing Middle East tensions
Market concerns over supply surplus
The oil market continues to be wary of a potential global supply surplus in 2025, largely driven by record production levels in the U.S. Despite this, the dollar’s weakness has helped to limit more significant losses in crude, particularly as traders maintain expectations for a 25 basis point interest rate cut from the Federal Reserve in December.
Recent market movements
On Wednesday, oil prices fell slightly, extending their recent declines as the ceasefire agreement between Israel and Lebanon reduced the perceived risk premium for crude. However, losses were tempered by industry data indicating an unexpected and substantial decrease in U.S. oil inventories, which fueled speculation about tighter supply conditions.
By 20:47 ET (01:47 GMT), January Brent oil futures had decreased by 0.2 percent to $72.70 per barrel, while WTI crude futures also fell 0.2 percent to $68.30 per barrel. The decline in oil prices was further restrained by a Reuters report suggesting that OPEC+ was considering postponing its plans to increase production.
