On Thursday (December 5th), US crude oil rose slightly during the Asian trading session, trading around $68.67 per barrel. Although EIA inventory data fell more than expected, it did not support the strengthening of oil prices and fell again near box pressure.

Fundamentally, there is a possibility of easing the geopolitical situation, and the short-term continuous fluctuations have desensitized the market's concerns about the geopolitical situation.

The upcoming OPEC+meeting this week is expected to extend production cuts, but before they are implemented, the market tends to be cautious and is currently back within the range of fluctuations, waiting for the direction to be chosen after the meeting is implemented.

The next two trading days of this week will mainly focus on whether US employment data will pressure the Federal Reserve's expectation of a December rate cut and whether the OPEC+meeting will extend production cuts.

The US Energy Information Administration (EIA) stated that the decline in US crude oil inventories last week exceeded expectations, and refinery production accelerated. Last week, the increase in gasoline and distillate inventories exceeded expectations.

In terms of specific data, as of the week ending November 29th, crude oil inventories decreased by 5.073 million barrels, with an expected value of 671000 barrels and a previous value of 1.844 million barrels. This provided some support for crude oil, but the effect was not very significant.

Industry sources indicate that OPEC+is likely to extend the production cuts until the end of the first quarter of next year during its meeting on Thursday.

Kpler's Chief Americas Oil Analyst Matt Smith said, "Although it is expected that the lifting of production cuts will be postponed, the speeches at the meeting will have the greatest impact

The probability of the Federal Reserve cutting interest rates by 25 basis points in December has risen to 77.5%, previously dropping as low as 70.5% the day before

According to CME's "Federal Reserve Watch", the probability of the Fed keeping current interest rates unchanged until December is 22.5%, and the probability of a cumulative 25 basis point rate cut is 77.5%.

The probability of maintaining the current interest rate unchanged until January next year is 17.2%, the probability of reducing interest rates by 25 basis points cumulatively is 64.5%, and the probability of reducing interest rates by 50 basis points cumulatively is 18.2%.

Federal Reserve Chairman Powell: Despite lower than expected downside risks, the Fed can cautiously move towards neutral interest rates

Federal Reserve Chairman Powell also stated on Wednesday that we have made very, very rapid adjustments in interest rates, the unemployment rate remains low, and progress is being made in inflation.

The economic situation is good, there is no reason to believe that this situation cannot be sustained. Over time, the Federal Reserve will move towards a more neutral interest rate, although the downside risk is lower than expected, the Fed can cautiously move towards a neutral interest rate.

The Federal Reserve is trying to find a middle ground with fewer policy restrictions so that inflation can decrease without harming the labor market. A lower level of survey response may increase the volatility of labor market data estimates.

It should be noted that the expectation of the Federal Reserve's interest rate cut in December has increased, but we still need to wait for guidance from non farm employment data. If the December interest rate cut is implemented, it will boost demand expectations and support bullish oil prices.

A source familiar with the talks said on Wednesday local time that the Middle East envoy selected by US President elect Trump met with the prime ministers of Qatar and Israel to initiate Trump's diplomatic efforts to reach a ceasefire and hostage release agreement in Gaza before his inauguration on January 20th.

Sources say that the incoming Middle East envoy Steve Witkoff visited Qatar and Israel at the end of November.

Sources added that these meetings indicate that Qatar has resumed its role as a key mediator after suspending it last month. Hamas negotiators may return to the Qatari capital Doha to facilitate a new round of negotiations.

From a technical perspective, after testing the Bollinger Bands on the daily chart of US crude oil, it has fallen again, and the KDJ indicator has opened downwards again. At the same time, it is suppressed by the moving average and treated as a short-term range. If it cannot break through the $70 integer level, it is not ruled out that the possibility of testing the lower Bollinger Bands near $67 cannot be ruled out.

Daily chart of US crude oil