By Oil prices pared losses from earlier in the session to trade higher on near-term tight supply and risks of disruptions from the Middle East.
The Organization of the Petroleum Exporting Countries and allies extended their voluntary production cuts of 2.2 million barrels per day till the end of December.
This is likely to support the market for the time-being amid heightened Middle East tensions.
Experts believe that the market would react if tensions escalated further between Israel and Iran.
Oil prices had fallen sharply since last week, with the West Texas Intermediate (WTI) crude falling below $70 per barrel.
Brent was also trading at a low $70 per barrel mark.
Carsten Fritsch, commodity analyst at Commerzbank AG, said in a report:
The recent price slide was triggered by disappointment over the lack of additional stimulus measures in China, which did little to alleviate demand concerns in the world’s second-largest oil consumer.
Iran supply at risk
There are concerns that the President-elect Donald Trump is expected to impose strict sanctions on Iran’s oil exports.
Trump’s expected secretary of state pick, U.S. Senator Marco Rubio, is known for his hardline stance on Iran, China and Cuba, according to a Reuters report.
Iran produces about 3.3 million barrels per day of crude oil, according to OPEC’s data. If supply is disrupted, it could mean a loss of over 1 million barrels per day of exports from Iran.
In such a scenario, oil prices would move higher.
However, demand concerns linger as OPEC downgraded its forecast for growth in global oil demand once again on Tuesday.
OPEC cuts demand growth estimates
The cartel revised down its estimates for growth in global oil demand for 2024 and 2025 for the fourth consecutive month in its November report.
OPEC cut forecasts for growth in global oil demand in 2024 by 107,000 barrels per day on Tuesday.
It now sees demand growing by 1.8 million barrels per day this year on average.
For 2025, the cartel said it had scaled down its forecasts for demand growth by 103,000 barrels per day from previous month’s assessment.
Most of the demand growth will be concentrated in the countries outside of the Organization for Economic Cooperation and Development alliance.
In non-OECD countries, demand is expected to rise by 1.4 million barrels per day next year.
The International Energy Agency will publish its monthly oil market report on Thursday.
Crude oil forecast
According to analysts at FXempire, the current price trend signals bullish momentum, if WTI prices stay above $68.77 per barrel.
Immediate resistance was seen at $68.80 per barrel, with further barriers at $69.89 and $70.41 if the momentum continued, according to FXempire.
Arslan Ali, analyst at FXempire, said in a report:
On the downside, support sits at $67.11 and then at $66.55, forming a cushion against sharper drops. Holding above $67.77 keeps the outlook positive, but a dip below could invite a sharper pullback.
For Brent crude, the immediate resistance was at $72.57, followed by $72.94.
Support is seen at $71.54 per barrel and $71.10. “A dip below $71.97 could shift the trend bearish,” said Ali.
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