Oil prices stabilized on Thursday after three consecutive days of losses, with West Texas Intermediate (WTI) crude finding support following OPEC+’s decision to postpone its December 1st meeting. The delay has fueled speculation that the group may extend its current production cuts rather than begin unwinding them, providing some optimism for price stability.
Geopolitical Tensions and Market Dynamics
Earlier in the week, oil prices fell sharply, dropping 3.5% on Monday, after Israel and Lebanon reached a ceasefire agreement. This temporarily reduced the geopolitical risk premium. However, ongoing conflict in Gaza underscores the persistent instability in the Middle East, leaving the broader outlook for geopolitical risks uncertain.
The market’s focus has shifted to the rescheduled OPEC+ meeting, now set for next week. The group is expected to discuss whether to postpone plans to ease production cuts, a move that could counteract concerns over sluggish demand and rising supply from non-OPEC producers.
Impact of China’s Economic Slowdown
China, the world’s largest oil importer, remains a critical factor for global oil demand. Despite recent government stimulus measures, the Chinese economy continues to show signs of weakness. This fragility could be exacerbated by the potential reintroduction of U.S. trade tariffs under the next administration, which may further dampen China’s growth and its oil consumption outlook.
U.S. Inventory Data Offers Mixed Signals
Recent U.S. inventory data provided a mixed picture for the oil market. The Energy Information Administration (EIA) reported a drawdown of 1.8 million barrels in crude oil inventories for the week ending November 22, suggesting some demand strength. However, gasoline inventories rose by 3.3 million barrels, raising concerns about weakening consumer demand in the transportation sector.
Trading Outlook for Oil Prices
Oil prices are currently trading within a familiar range, with resistance levels between $71.50 and $72.50 and support at $67.50. A breakout above the resistance zone could push prices toward the $75.00 mark, while a drop below $67.50 might lead to a retest of September’s lows around $65.25.
With U.S. markets operating on reduced hours due to the Thanksgiving holiday, trading volumes are expected to remain light. As market participants await further clarity from OPEC+ and developments in global demand dynamics, oil prices are likely to stay range-bound in the near term.
