On Wednesday (December 4th), US crude oil continued to rise during the Asian trading session, trading near $70.00 per barrel. The market's pressure on the supply side was reignited due to Israel's threat that if the ceasefire agreement with Hezbollah breaks down, Lebanon will reignite the war.

At the same time, OPEC+may extend its production cuts at this week's meeting, which to some extent will fuel bullish sentiment in oil prices. However, it should be noted that API crude oil inventories increased by 1.2 million barrels last week, which is unfavorable for bullish oil prices.

This trading day, the focus is on EIA inventory data. Currently, the market expects a decrease of 700000 barrels in crude oil inventory and an increase of 639000 barrels in gasoline inventory. If the decrease in crude oil inventory is lower than expected, there is a possibility of another drop in oil prices, and we are waiting for the data to be released.

The Israeli army ignored the ceasefire agreement reached in Lebanon last week and continued to strike what they called Hezbollah fighters. Senior Lebanese officials urge Washington and Paris to pressure Israel to maintain a ceasefire.

UBS analyst Giovanni Staunovo said that the ceasefire is at risk, making some oil traders more concerned about the tense situation in the Middle East.

Staunovo added that although the conflict in Lebanon did not lead to a disruption in oil supply, traders will closely monitor the tense situation between Iran and Israel in the coming months.

The Organization of the Petroleum Exporting Countries and its allies may extend production cuts at the OPEC+meeting on Thursday, which also supports oil prices.

Four sources from OPEC+indicate that the organization is likely to extend production cuts until the end of the first quarter of next year.

Researchers and analysts say that the outlook for global oil demand remains weak, and as transportation fuel demand begins to decrease, China's crude oil imports may peak as early as next year.

The probability of the Federal Reserve cutting interest rates by 25 basis points in December has dropped to 70.3%, compared to approximately 74.5% the day before

According to CME's "Federal Reserve Watch", the probability of the Federal Reserve keeping current interest rates unchanged until December is 29.7%, and the probability of a cumulative 25 basis point rate cut is 70.3%.

The probability of maintaining the current interest rate unchanged until January next year is 22.0%, the probability of reducing interest rates by 25 basis points cumulatively is 59.9%, and the probability of reducing interest rates by 50 basis points cumulatively is 18.0%.

From the perspective of the expectation of the Federal Reserve's interest rate cut, if the December rate cut is implemented, it will support the recovery of demand, and the bullish trend in oil prices is expected to rise again. However, this week's US non farm payroll data has not yet landed and further verification of the data is needed.

From a technical perspective, US crude oil is still within the box and there is a certain risk of chasing after the price before breaking through the moving average pressure. If US crude oil breaks through the pressure around $70.6 strongly, the bulls are expected to enter an acceleration phase.

Daily chart of US crude oil