Oil prices edged lower on Wednesday as a large, surprise build in US gasoline stocks outweighed easing supply concerns from a ceasefire deal between Israel and Lebanon.
Brent crude futures fell 12 cents, or 0.2%, to $723.69 a barrel by 1540 GMT and US West Texas Intermediate crude eased 15 cents, or 0.2%, to $68.64. US gasoline stocks rose by 3.3 million barrels in the week to 212.2 million barrels, the Energy Information Administration said.
Crude stocks fell by 1.8 million barrels in the week ended November 22, the EIA added. Market sources, citing the American Petroleum Institute, had said on Tuesday that oil inventories fell by 5.94 million barrels and fuel inventories rose last week.
Both benchmarks had settled lower on Tuesday after Israel agreed to ceasefire in Lebanon, effective Wednesday after both sides accepted the agreement brokered by the US and France.
“The real question will be for how long the ceasefire will truly be honoured,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Supporting prices, sources from the OPEC+ group have said the 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 December 1 meeting.
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 Donald Trump.
“With Trump’s sanctions soon to come, many think Iran will be targeted, which could slow their exports substantially,” BOK’s Kissler said.
