On Thursday (December 5th), crude oil prices showed a slight fluctuation, with market attention focused on the later OPEC+online meeting and recent changes in the geopolitical situation. As of 15:56 Beijing time, the continuous contract price for Brent crude oil was $72.31 per barrel, a slight decrease of 0.11%; The continuous contract for US crude oil traded at $68.60 per barrel, with a slight increase of 0.09%. After a significant drop of nearly 2% in the previous trading day, oil prices have entered a consolidation phase and are awaiting further guidance.

Investors are highly concerned about the supply decisions that OPEC+may take. The market generally expects that the alliance is expected to extend its latest production reduction plan for at least three months in order to support oil prices. However, due to the lingering macro uncertainty, bullish confidence is still somewhat suppressed.

Multiple driving factors in the crude oil market

Recently, the crude oil market has been affected by multiple factors, from OPEC+policy expectations to geopolitical turmoil, and to the performance of US economic data. These variables work together to significantly increase the volatility of oil prices.

OPEC+decision undecided

OPEC+will hold an online meeting at 19:30 Beijing time to discuss whether to extend the current production reduction agreement. According to informed sources, the current trend is to extend the production reduction plan until March next year. If this decision is implemented, it will provide key support for oil prices. However, some market analysts point out that OPEC+still faces pressure to maintain market share, especially in the context of potential increased production in the United States, and the alliance's balancing strategy may become increasingly complex. Lotte Securities analyst Satoru Yoshida said that OPEC+'s decision may trigger short-term market volatility, but its long-term goals are still constrained by the prospects of global economic recovery and US energy policies.

Inventory data and demand side support

The US Energy Information Administration (EIA) data released on Wednesday showed that US crude oil inventories fell more than expected last week, providing some support for oil prices. This data to some extent reflects the resilience of current market demand. However, the market remains cautious about the global demand outlook, especially against the backdrop of slowing growth in major economies.

Geopolitical situation and macro risks

The situation in the Middle East continues to bring uncertainty to the market. Israel threatens to launch deeper military actions if the ceasefire agreement with Hezbollah breaks down, posing a direct threat to the Lebanese state. In addition, the diplomatic efforts of the US Special Envoy for the Middle East in the Gaza ceasefire negotiations have also become a focus of attention. These factors provide certain support for the safe haven demand in the crude oil market, while increasing the uncertainty of supply and demand expectations.

Investor sentiment and market expectations

While waiting for the results of the OPEC+meeting, some investors have chosen to take a wait-and-see approach and the market lacks a clear direction in the short term. IG market strategist Yeap Jun Rong pointed out that the market is cautious about whether OPEC+can continue to effectively support oil prices. At the same time, the potential pressure that Trump's policies may pose on future crude oil supply also limits the policy space of OPEC+.

Technical Observation and Market Outlook

From a technical perspective, oil prices are still in a volatile range. Brent crude oil is fiercely contested between long and short positions near the $72 mark, with the upper resistance level temporarily hovering around $73.50 and the lower support expected to be around the $71 line. In terms of US crude oil, the support zone of $68 has performed steadily, but if the upward attack fails, there is a possibility of a short-term retracement to $67.

Against the backdrop of the upcoming OPEC+conference, the market is expected to enter a window of increased volatility. If the meeting extends the production reduction cycle, oil prices may receive further boost. However, if the outcome of the meeting falls short of market expectations, bearish forces may take advantage of the situation. In addition, further developments in the geopolitical situation and the performance of US economic data will also have a significant impact on the future direction.

Overall, the crude oil market will continue to fluctuate in the short term around OPEC+decisions and the situation in the Middle East. In the medium to long term, the trend of oil prices will rely more on the pace of global economic recovery and the supply and demand control capabilities of major oil producing countries.