Oil futures rose by about 0.9%, helped by the pullback of the US dollar, the escalation of geopolitical tensions in the Middle East and the news that China's top leaders plan to map out economic targets and stimulus for 2025 at a gathering next Wednesday. Market participants are also preparing for the OPEC+ meeting, which will be held on Thursday.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.21% to 106.23.
As for the OPEC+ meeting, investors expect the group to extend its latest round of oil production cuts until the end of the first quarter. OPEC+, which accounts for about half of global oil production, aims to gradually reverse production cuts through 2025. However, the prospect of a surplus in the oil market has put downward pressure on prices and reduced the likelihood of an increase in production. Meanwhile, global oil demand is forecast to remain weak, with crude oil imports to China likely to peak as early as next year as demand for transportation fuels begins to decline.
The situation in the Middle East also remained in focus. Despite the ceasefire agreement between Israel and the Hezbollah militant group, hostilities have intensified again: the media reported strikes on two southern Lebanese cities shortly after Hezbollah fired rockets at Israeli military positions in the disputed Shebaa Farms area.
In addition, colder-than-usual temperatures in Europe at the start of the Northern Hemisphere winter have led to a flicker of bullishness in diesel, which includes heating oil still commonly used in the region.