Investing.com– Oil prices were flat in Asian trade on Wednesday after rising sharply in the previous session as Israel threatened to attack Lebanon if its truce with Hezbollah ends.
But oil’s momentum was halted by industry data showing an unexpected rise in US oil inventories. Sentiment also remained largely uncertain ahead of Thursday’s OPEC+ meeting, where the cartel is expected to further delay plans to increase output.
Still, oil has retained some risk premium as Israel and Hezbollah have repeatedly violated the recently announced cease-fire. Heightened tensions between Russia and Ukraine also kept traders on edge.
which expires in February was down 0.1% at $73.58 a barrel, while it was down 0.1% at $69.50 a barrel by 20:51 ET (01:51 GMT). Both contracts rose over 2% on Tuesday.
Israeli-Lebanese tensions in focus over ceasefire violations
Oil was boosted by heightened tensions in the Middle East after Israel threatened to attack the Lebanese state if a ceasefire with Hezbollah was broken.
The threat came after Israel and Hezbollah launched attacks against each other despite agreeing to a US-brokered ceasefire last week.
Israeli Defense Minister Israel Katz threatened to hold Lebanon responsible for not disarming Hezbollah.
Recent strikes and rhetoric suggest that last week’s truce may not hold, presenting the prospect of heightened tensions in the Middle East and keeping the risk premium for oil in play.
US inventories rise more than expected – API
Data from US crude inventories showed a rise of 1.2 million barrels (mb) in the week to November 29, compared with expectations for a 2.1 mb draw.
The reading fueled some concerns that demand in the world’s biggest fuel consumer is easing, especially as the winter season approaches.
API data usually heralds a similar reading from , which should be released later on Wednesday. All signs of an increase in US inventories point to lower inventories.
The OPEC+ meeting is awaited for indications of supply
Market focus was also on Thursday’s meeting of the Organization of the Petroleum Exporting Countries and Allies (OPEC+), where the cartel is expected to further delay plans to increase output.
OPEC+ has steadily cut its outlook for oil demand in 2024 and 2025, citing concerns about slowing growth in top importer China.
Any extension of OPEC’s ongoing supply cuts is likely to boost oil prices through 2025 by tightening the market.
