Crude Oil Prices Stabilize Amid Ceasefire and OPEC+ Expectations

Crude oil prices remained steady today following the announcement of a ceasefire between Israel and Hezbollah, sparking hopes that the violence in the oil-rich region could soon come to an end. In addition, expectations that OPEC+ will extend its production cuts at their upcoming meeting on Sunday have kept the market calm.

As of the latest data, Brent crude is priced at $72.88 per barrel, while West Texas Intermediate (WTI) is trading at $68.80 per barrel. Although prices experienced a dip on Tuesday after the ceasefire announcement, they have shown slight improvement since. However, Israeli strikes on Lebanon raised concerns about the sustainability of the ceasefire deal.

Hiroyuki Kikukawa, head of NS Trading at Nissan Securities, noted that market participants are closely monitoring the ceasefire’s durability. “We expect WTI to trade between $65-$70 a barrel, considering weather conditions in the Northern Hemisphere's winter, potential shale oil production increases in the U.S., and demand trends in China,” Kikukawa said.

OPEC+ Production Cuts and U.S. Crude Production

Goldman Sachs has predicted that OPEC+ will extend its production cuts, which could provide short-term support for oil prices. The bank emphasized that any increase in OPEC+ production would be gradual, based on market data and price trends. Commodity trading giants like Vitol, Trafigura, and Gunvor also do not foresee an increase in OPEC+ oil output following the Sunday meeting, which has helped stabilize prices, though without significant positive momentum.

The U.S. continues to dominate the global oil market, with crude oil production setting a new record in August 2024, reaching 13.4 million barrels per day (bpd). This solidifies the country’s position as the world’s leading oil producer, a title it has held since 2018. U.S. production is expected to rise further, with a forecast of 13.5 million bpd by 2025, driven by advancements in shale oil extraction, including fracking and horizontal drilling techniques.

Positive Outlook Amidst Market Volatility

Although OPEC+ production decisions and geopolitical events continue to impact the oil market, U.S. shale producers have proven resilient, with healthy margins thanks to steady prices around $69.58 per barrel for WTI and $73.66 per barrel for Brent. Major oil companies such as ExxonMobil, Chevron, Shell, BP, and TotalEnergies have reported growing production and are focusing on lower-cost assets to meet global energy demand. Meanwhile, European energy majors have scaled back their renewable energy ambitions in favor of strengthening their oil and gas operations.