Brent crude futures were down 54 cents, or 0.74%, at US$72.47 a barrel as of 1:41 p.m. EST. US West Texas Intermediate crude futures were at US$68.45 a barrel, down 49 cents, or 0.71%.
HOUSTON: Oil prices slid on Tuesday, giving back early gains in choppy trade after Israel agreed to a ceasefire deal with Lebanon, reducing oil's risk premium.
Brent crude futures were down 54 cents, or 0.74%, at US$72.47 a barrel as of 1:41 p.m. EST. US West Texas Intermediate crude futures were at US$68.45 a barrel, down 49 cents, or 0.71%.
Israel's security cabinet has agreed a ceasefire deal with Lebanon, Channel 12 reported. The accord was expected to take effect on Wednesday.
Israeli Prime Minister Benjamin Netanyahu said he was ready to implement a ceasefire deal with Lebanon and would "respond forcefully to any violation" by Hezbollah.
On Monday, oil prices fell more than US$2 following multiple reports that Israel and Lebanon had agreed to the terms of a ceasefire in the Israel-Hezbollah conflict.
A ceasefire could pressure crude oil prices because the US administration would likely reduce sanctions on oil from Iran, a supporter of Hezbollah, StoneX analyst, Alex Hodes said in a note on Tuesday.
Both benchmarks briefly jumped more than US$1 per barrel during the session.
"We popped and dropped around the time news came out of the resumption of Opec talks," said Phil Flynn, senior analyst at Price Futures Group.
Opec+ nations are discussing a further delay to a planned oil output hike that was due to start in January, two sources from the producer group said, ahead of Sunday's meeting to decide policy for the early months of 2025.
The group pumps about half the world's oil, and had planned to gradually roll back oil production cuts with small increases over many months in 2024 and 2025. But a slowdown in Chinese and global demand, and rising output outside the group, have put a dampener on that plan.
"There were embers in the fire this morning with Opec+ looking to defer production increases again and the Trump tariffs, but those were not enough to move the needle to support prices anywhere above $70 a barrel for WTI," said Again Capital's Kilduff.
US President-elect Donald Trump said he would impose a 25% tariff on all products coming into the US from Mexico and Canada.
Crude oil would not be exempt from the trade penalties, two sources familiar with the plan told Reuters on Tuesday.
Maintaining the flow of energy products across the borders of the US, Mexico and Canada is critical, the top US oil and gas lobbying group, American Petroleum Institute, said.
The vast majority of Canada's 4 million bpd of crude exports go to the US. Analysts had said it would be unlikely Trump would impose tariffs on Canadian oil, which cannot be easily replaced since it differs from grades that the US produces.
Monday's tariffs announcement does not seem to be having an immediate impact on Canadian oil markets, market sources said.
Meanwhile, US crude oil and gasoline stockpiles were expected to have fallen last week while distillate inventories likely rose, an extended Reuters poll showed.
Investors await US oil stockpile data from the American Petroleum Institute due at 4:30 p.m. EST on Tuesday. — Reuters
