Crude oil struggles to maintain the $70 mark as a surprising increase in U.S. stockpiles comes ahead of the OPEC+ decision

• Oil prices are reversing just one day before Thursday’s OPEC+ meeting.
• Strong remarks from U.S. President-elect Donald Trump, who warned of escalating conflict in the Middle East if hostages are not released, are adding to market tension.
• Meanwhile, the US Dollar Index remains range-bound ahead of Friday’s US Jobs Report.

Crude oil briefly surged above the $70 mark on Wednesday before reversing, as traders grew cautious amid escalating geopolitical tensions and the possibility of OPEC+ taking action. On the geopolitical front, President-elect Donald Trump warned of escalating conflict in the Middle East if Hamas fails to release Israeli hostages by the time he assumes office in January. Additionally, OPEC+ may surprise both allies and adversaries with a potential six-month delay in its planned production output normalization, according to report.

The US Dollar Index (DXY), which tracks the USD against a basket of major currencies, has been inching higher within a narrow range ahead of Friday’s Nonfarm Payroll report. Traders seem to be holding off on significant moves, awaiting the final Jobs Report of 2024. Federal Reserve Chairman Jerome Powell is scheduled to speak later on Thursday, but no major market-moving comments are anticipated.

The latest overnight data from the American Petroleum Institute (API) revealed a surprising increase in crude oil stockpiles, showing a build of 1.232 million barrels, contrary to the anticipated drawdown of 2.06 million barrels. This partly offsets the significant drawdown of 5.935 million barrels recorded the previous week.