Brent rangebound as Israel-Hezbollah ceasefire deal offsets tensions in eastern Europe

The front-month ICE Brent contract has shed $0.38/bbl on the day from Friday, to trade at $72.45/bbl at 09.00 GMT.

PHOTO: An oil pumpjack. Getty Images

Upward pressure:

Brent’s price gained some upward thrust as Russia and Ukraine continued to exchange airstrikes on critical energy facilities over the weekend.

A Ukrainian drone hit the Atlas oil depot in the Kamensky district of Russia’s Rostov region, the Ukrainian army’s General Staff said on its official Telegram channel.

The attack caused “at least” two fires in the energy facility, the Ukrainian army said.

Besides, oil market participants are awaiting OPEC's next move. The Saudi Arabia-led producers’ group is due to virtually meet on 5 December, to discuss its plans to gradually phase out the ongoing 2.2 million b/d voluntary production cut.

“Traders are braced for OPEC to extend its current production cuts, a decision that could keep a short-term floor under prices,” SPI Asset Management’s managing partner Stephen Innes said.

Downward pressure:

The global oil market continues to “trade in a fairly narrow range,” two analysts from ING Bank remarked, as a ceasefire deal between Israel and Iran-aligned Hezbollah armed group, “which appears to be holding, will be weighing on prices.”

The ceasefire agreement achieved last week was mediated by the US and France, the White House said in a statement. However, it mentioned that the deal did not extend to the ongoing conflict between Israel and Hamas in the Gaza Strip.

Nonetheless, the market’s focus will remain on further developments in the broader geopolitical landscape of the Middle East – a key oil-producing hub.

“[Oil] trading landscape [will remain] in a state of cautious anticipation until the next major market-moving event unfolds,” Innes said.

By Aparupa Mazumder

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