Oil prices settled lower on Wednesday, with Brent crude for January falling by $0.50 (0.68%) to $72.81 and the December WTI contract dropping $0.52 (0.75%) to $68.87. The more active WTI January contract ended at $68.75, down $0.49 (0.71%). Prices were pressured by higher-than-expected U.S. crude and gasoline stockpiles, as reported by the Energy Information Administration. Additionally, the full restoration of production at Norway’s Johan Sverdrup oilfield further weighed on prices by boosting supply.
Despite the supply-side pressures, concerns about the ongoing Russia-Ukraine conflict provided some support to oil prices. Geopolitical risks, particularly related to potential disruptions in oil supply, continued to keep a floor under prices. On Wednesday, Ukraine fired a volley of British Storm Shadow missiles into Russia, further escalating tensions in the region.
Weak demand from China also added to the bearish sentiment, with stimulus measures failing to have an immediate impact on oil consumption. The market also remains concerned about the broader geopolitical landscape, including the Middle East, as U.S. vetoed a U.N. Security Council resolution for a ceasefire in Gaza, which fueled concerns about potential supply disruptions.
While geopolitical risks supported oil prices, long positions in WTI have declined significantly, with hedge funds holding only 50% of their summer levels. OPEC+ is also expected to consider delaying output increases during its December 1 meeting due to weak global demand.