On Wednesday, November 27, US crude oil saw a slight decline during the Asian trading session, trading around $68.60 per barrel, as a ceasefire agreement between Israel and Lebanon lowered the risk premium on oil. However, OPEC+ will hold a meeting this Sunday, considering the extension of production cuts, which still supports oil prices.The bullish sentiment for oil prices is challenged by unfavorable fundamentals, and the dollar index remains high; under the influence of geopolitical circumstances, oil prices have failed to break through resistance in the trading range. With sentiments dissipating, prices may revert to a downward oscillation, and a retest of the lower boundary of this range can’t be ruled out.Today, the focus will be on changes in geopolitical situations and EIA inventory data.The latest data from the American Petroleum Institute (API) indicates that US crude oil inventories fell last week, while petroleum product inventories rose. In the week ending November 22, crude oil inventories decreased by 5.94 million barrels, contrasting with analysts' expectations of a reduction of about 600,000 barrels.Israel and Hezbollah have agreed to a ceasefire brokered by the US and France, effective Wednesday.Following the acceptance of the agreement mediated by the US and France, the ceasefire between Israel and Hezbollah will take effect on Wednesday.The UN Special Coordinator for Lebanon, Jeanine Hennis-Plasschaert, welcomed the ceasefire agreement, praising the parties for "seizing the opportunity to close this destructive chapter"."It is time for concrete actions to solidify today’s achievements." However, there are no indications that the ceasefire in Lebanon will expedite the ceasefire and hostage release agreement between Israel and Hamas in Gaza.OPEC+ discusses further postponement of production increaseTwo OPEC+ sources stated on Tuesday that member countries are considering further postponement of the planned oil production increase set to commence in January, with the group scheduled to meet on Sunday to decide on the production policy for the initial months of 2025.On Tuesday, member countries Iraq, Saudi Arabia, and Russia held talks in Baghdad. OPEC+ accounts for about half of global oil production and had originally planned to slightly increase oil output over several months in 2024 and 2025 to gradually exit the production cuts.However, global demand has slowed, and non-OPEC+ oil-producing countries have ramped up production, affecting this plan. Azerbaijan's Energy Minister Parviz Shahbazov told Reuters on Monday that OPEC+ might consider maintaining the current production cuts beyond January 1 in the Sunday meeting.According to OPEC+ sources, the meeting will be held online. Last week, sources indicated that the production increase might be delayed until the first quarter. Analysts from Commerzbank anticipate at least a delay until the end of the first quarter.No plans to exempt oil from new tariffs targeting Mexico and CanadaThe plan to impose tariffs on crude oil from primary suppliers Canada and Mexico has met criticism from major US industry organizations, who call tariffs on oil a mistake. Oil analysts and traders have warned that such a move will elevate oil prices, particularly impacting regions in the US Midwest that heavily rely on Canadian crude.Sources have indicated that there are no intentions to exempt crude oil from the 25% import tariffs planned for Canada and Mexico, with the oil industry cautioning that this policy could harm consumers, industries, and national security.According to the US Department of Energy, Canada and Mexico account for a significant portion of US crude oil imports, together representing about a quarter of the total oil processed by US refineries into fuels such as gasoline and heating oil.The oil industries in the US and Canada have been optimistic that broad protectionist trade measures will not adversely affect oil imports, as many US refineries depend on these two countries and have facilities specifically designed to process the types of oil from them."Comprehensive trade policies could raise import costs, reduce the availability of oil inputs and products, or trigger retaliatory tariffs, which may affect consumers and undermine our global standing as a leading liquid fuels producer,"stated a representative from the American Fuel & Petrochemical Manufacturers (AFPM).AFPM has emphasized that its industry will "continue to urge officials not to adopt any policies that could undermine US energy advantages".Meanwhile, the American Petroleum Institute (API) stressed the importance of maintaining cross-border energy trade in response to questions about tariff threats.Oil industry analysts and traders have also warned that this move could push up prices at US refineries, squeezing profit margins and raising fuel costs.According to data from the US government's statistical office, in 2024, the US is expected to import approximately 5.2 million barrels of crude oil and oil products daily from Canada and Mexico, with over 4 million barrels coming from Canada.The largest impact would stem from tariffs on Canadian crude, which is a crucial supply source for Midwestern refineries in the US.From a technical perspective, the daily chart of US crude oil continues to trend downward, with moving averages pointing downwards and the KDJ indicator showing a death cross. Signs of an end to this round of rebound are present, and a retest near the support level of $66.50 at the lower boundary of the range remains possible.It is noteworthy that the fundamentals yield mixed signals, and the probability of oil prices breaking downward directly or breaking upward is relatively low in the short term, suggesting continued oscillation within the trading range.
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