On Thursday, December 5th, crude oil traded slightly higher during the Asian session, hovering around $68.67 per barrelDespite the drawdown in EIA inventory data surpassing expectations, oil prices struggled to maintain upward momentum and retreated near resistance levelsThis behavior indicates the market's struggle to find solid ground amidst external pressures.

Geopolitical tensions may be easing, albeit temporarily, as repeated fluctuations have somewhat desensitized traders' worries about global developments like conflicts and trade disputesThe upcoming OPEC+ meeting has raised expectations for an extension of production cuts, but until concrete decisions are made, market sentiment remains cautious, oscillating back into a range of price movements, eager to ascertain direction following the meeting.

Over the next couple of trading days, the spotlight will be on the U.S

employment data and its implications for the Federal Reserve's interest rate cuts expected in December, along with the OPEC+ conference's potential to prolong current production restrictions.

Recently, the U.SEnergy Information Administration (EIA) reported that last week's drop in crude oil inventory was greater than anticipated and attributed to an uptick in refinery outputHowever, gasoline and distillate stocks saw substantial increases, exceeding forecasts.

The specific numbers reveal that for the week ending November 29, crude stocks plummeted by 5.073 million barrels, far exceeding the expected decrease of 671,000 barrels and a prior drop of 1.844 million barrels

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This data provided some support to oil prices, though its impact was muted in a broader context.

Industry insiders indicate that OPEC+ will likely extend its production cuts during their meeting on Thursday, pushing the timeline to the end of the first quarter next year.

Matt Smith, Kpler's chief oil analyst for the Americas, noted, "While a delay in lifting production cuts is expected, the rhetoric during the meeting will have the most significant impact."

As Federal Reserve changes to interest rate projections gain traction, the probability of a 25-basis-point cut in December surged to 77.5%, up from a low of 70.5% the previous day.

According to CME's "FedWatch Tool": the likelihood of the Fed holding the current interest rates steady through December stands at 22.5%, while the cumulative likelihood of a 25-basis-point cut is at 77.5%. Looking into January, the probability of maintaining the existing rate drops to 17.2%, while the chance of achieving a 25-basis-point cut stands at 64.5%, and 50-basis-point cut at 18.2%.

Federal Reserve Chairman Jerome Powell has indicated that although downside risks have been less significant than expected, the Fed can gradually proceed towards a neutral rate.

During a recent address, Powell remarked that the pace of adjustments to interest rates has been extraordinarily rapid, with low unemployment levels indicating the economy is moving in a positive direction with inflation gradually improving.

He highlighted that there is no reason to believe the current economic conditions can't continue, as the Fed aims to find a balanced approach that facilitates a gradual decrease in inflation while ensuring the labor market remains insulated from shocks.

However, a troubling phenomenon of lower survey response levels is emerging, which could increase the volatility inherent in estimating labor market data, complicating the assessment of overall economic conditions.

It’s important to note that while expectations of rate cuts have increased in December, market participants will still be closely monitoring non-farm payroll data for guidance

If a reduction is confirmed, it could boost demand expectations and lend support to upward pressure on oil prices.

A well-informed source indicated that the U.Sis pursuing diplomatic efforts ahead of January 20th with a special Middle East envoy encountering officials from Qatar and Israel to initiate negotiations for a ceasefire and hostages' release in Gaza.

The soon-to-be-appointed Middle East envoy, Steve Wietkoff, reportedly visited Qatar and Israel at the end of November, suggesting a restoration of Qatar's role as a key mediator after its withdrawal last monthNegotiators from Hamas may return to Doha to facilitate a new round of discussions.

From a technical perspective, crude oil prices tested the middle Bollinger Band but subsequently retreated