Quantum Commodity Intelligence – Crude oil futures Tuesday steadied at the week’s lower levels after the proposed ceasefire between Israel and Hezbollah was set to be confirmed. 

Front-month Jan25 ICE Brent futures were trading at $73.36/b (1700 GMT), compared to Monday’s settle of $73.01/b, while the North Sea benchmark also recovered from the intraday low of $72.70/b.

At the same time Jan25 NYMEX WTI was trading at $69.31/b versus Monday’s settle of $68.94/b.

According to Israeli media, the country’s national security cabinet will meet later Tuesday to discuss the ceasefire proposal amid widespread reports that the deal had been all but agreed.

But White House National Security Council spokesman John Kirby said late Monday that the Israel-Hezbollah ceasefire has not been finalised despite mounting press reports that the deal has been done.

“We’re close, the discussions were constructive, and the trajectory of this is going in a very positive direction, but nothing is negotiated until everything is negotiated,” said John Kirby, White House National Security Council spokesman, during a press briefing.

Kirby added that the settlement was a top priority for the outgoing Biden administration, with the US heading the international body overseeing the deal’s implementation and France also sitting on the panel.

Oil markets were kept on edge amid potential resistance from some Israeli politicians, unless convinced its Hezbollah adversary is completely paralysed.

While this part of the broader Middle East conflict has had little direct impact on energy supplies, it could influence longer-term policy toward Iran.

“A ceasefire in Lebanon reduces the likelihood that the incoming US administration will impose stringent sanctions on Iranian crude oil,” said ANZ commodity strategist Daniel Hynes.

However, there was no sign of an easing of tensions in the Russia/Ukraine conflict, which is currently having more impact on energy prices, especially natural gas. 

Bloomberg reported Thursday that the UK delivered dozens more Storm Shadow cruise missiles to Ukraine in recent weeks, further souring relations between Moscow and Ukraine’s European supporters.

The Kremlin has also indicated it is preparing retaliatory measures after Ukraine fired US-supplied ballistic missiles into Russia over the last three days.

OPEC+

Meanwhile, the market is closely monitoring messaging from OPEC+ officials ahead of this weekend’s meeting, with opinion swaying towards another pause in its scheduled production hikes.

The group had originally planned to start unwinding 2.2 million bpd of voluntary cuts from October but has already delayed twice due to demand concerns and sluggish prices.

Traders were also looking for signs of the impact of Beijing’s policy measures to boost economic activity.

“Activity indicators for October showed encouraging signs of accelerating growth. The support policy measures implemented by the authorities are finally beginning to bear fruit,” said BNP Paribas in a client note.

“However, the improvement is not widespread, as deflationary pressures persisted and credit growth continued to weaken,” added the report, but noted the services-sector growth accelerated to +6.3% y-o-y in October, compared with +5.1% in September and +4.7% on average over the previous four months.