WTI crude oil prices experienced a slight uptick during the European trading session. With the U.S. stock market closed for Thanksgiving, trading activity is expected to remain light, prompting cautious behavior among investors considering buying or selling at current levels.
The market is reacting to the news of a ceasefire agreement between Israel and Hezbollah, mediated by the U.S. and France. Although this development suggests a stabilization in the geopolitical landscape, traders remain skeptical about the ceasefire's durability.
Attention is now turning to the upcoming OPEC+ meeting on December 1. Sources indicate that OPEC, which controls nearly half of the global oil supply, may postpone its planned production increase originally set for January. Maintaining the current production cuts of 2.2 million barrels per day could support prices into early 2025.
In the U.S., the American Petroleum Institute (API) reported a significant decrease in crude oil inventories by 5.94 million barrels, far exceeding the expected 600,000 barrels. However, an increase in fuel inventories suggests mixed demand signals.
Compounding supply uncertainties, President-elect Trump has proposed a 25% tariff on all goods imported from Mexico and Canada. Although crude oil is seemingly unaffected, such trade policies could disrupt broader trade flows, indirectly impacting the energy market.
Leading investment banks like Goldman Sachs and Morgan Stanley believe current oil prices are undervalued due to supply shortages and potential risks from Iranian production. They forecast that WTI crude prices will range between $65 and $70 in the short term, influenced by winter weather, shale oil production levels, and demand trends from China.
While geopolitical and supply factors have stabilized oil prices, the market awaits confirmation from OPEC+ on extending production cuts. Traders should monitor the December 1 meeting closely, as it could determine whether crude prices strengthen in the first quarter of 2025.
Key resistance levels are $71.46 and the 100-day moving average at $72.40. The 200-day moving average at $76.32 remains distant but could be tested if tensions escalate. On the downside, traders should watch for support at $67.12, with further levels at $64.75 and $64.38 if breached.
