Oil Stabilizes Ahead of OPEC Supply Meeting as Volatility Drops

(Bloomberg) — Oil was little changed as traders watched for clues on OPEC ’s supply plans ahead of a key meeting this Thursday.

Brent crude traded near $72 a barrel after ending just 1 cent lower on Monday, with West Texas Intermediate above $68, as recent lackluster price action sent a gauge of implied volatility to its lowest in about two months. Traders still expect the producer group to further delay restoring some production due to concerns of a glut next year.

Oil initially rose on Monday on signs of a gradual economic recovery in China, the biggest importer, before paring gains as the dollar strengthened, reducing the appeal of commodities. Futures have been trading in a range of a little more than $6 since mid-October, buffeted by geopolitical developments in the Middle East and Russia and the demand outlook in China.

“Despite the ongoing cross-currents we’ve hit a fair value that looks sticky for the short-term” with Brent at current levels, said Chris Weston, head of research for Pepperstone Group. “For now, the oil market is happy to massage positions and prepare to react should new news break.”

In the Middle East, Israel said it’s still committed to a ceasefire after carrying out airstrikes in Lebanon in response to Hezbollah’s first attack under the truce. In Syria, meanwhile, a conflict has flared up as rebels attacked key cities.

Elsewhere, 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. Speculators cut short positions for the refined product for a fourth consecutive week, the longest such run since February.

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