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Ceasefire between Israel and Hezbollah came into effect on

Wednesday

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OPEC+ considering delaying oil output increase, sources

say

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Analysts see oil prices as undervalued

(Updates with latest prices, background)

By Emily Chow

SINGAPORE, Nov 27 (Reuters) - Oil prices edged up on

Wednesday, with markets assessing the potential impact of a

ceasefire deal between Israel and Hezbollah and Sunday's OPEC+

meeting, in which the group could delay a planned increase to

oil output.

Brent crude futures rose 29 cents, or 0.4%, to

$73.10 a barrel by 0750 GMT and U.S. West Texas Intermediate

crude was up 26 cents, or 0.4%, at $69.03.

Both benchmarks settled lower on Tuesday after Israel agreed

to a ceasefire deal with Lebanon's Hezbollah.

The ceasefire between Israel and Iran-backed Hezbollah came

into effect on Wednesday after both sides accepted the agreement

brokered by the U.S. and France.

The accord cleared the way for an end to a conflict across

the Israeli-Lebanese border, which has killed thousands of

people since it was ignited by the Gaza war last year.

"Market participants are assessing whether the ceasefire

will be observed," said Hiroyuki Kikukawa, president of NS

Trading, part of Nissan Securities.

"We expect WTI to trade within the range of $65-$70 a

barrel, factoring in weather conditions during the Northern

Hemisphere's winter, a potential increase in shale oil and gas

production under the incoming Donald Trump administration in the

U.S. and demand trends in China."

Heads of commodities research at Goldman Sachs ( GS ) and

Morgan Stanley ( MS ) said that oil prices are undervalued,

citing a market deficit and risk to Iranian supply from possible

sanctions under U.S. President-elect Donald Trump.

Sources from the OPEC+ group comprising the Organization of

the Petroleum Exporting Countries and allies led by Russia have

said the producer group is discussing a further delay to the oil

output increase that was due to start in January.

OPEC+, which meets on Dec. 1 to decide policy for early

2025, pumps about half the world's oil and had planned to roll

back oil production cuts gradually over 2024 and 2025. But a

slowdown in Chinese and global demand, as well as rising output

outside the group, have put a dampener on that plan.

"Our longstanding base case has been that OPEC+ defers the

tapering of output cuts all the way through 2025," Citi Research

analysts said in a note, adding that the tapering could start in

April instead of January.

"From the producer group's point of view, holding off the

unwind could allow the market the chance to be more balanced,

via supply disruptions or more resilient demand, while bringing

barrels back makes lower prices a foregone conclusion."

In America, President-elect Trump said that he would impose

a 25% tariff on all products coming into the U.S. from Mexico

and Canada. Crude oil would not be exempt from the trade

penalties, sources told Reuters on Tuesday.

Meanwhile, U.S. crude oil stocks fell and fuel inventories

rose last week, market sources said on Tuesday, citing API

figures.

Crude stocks fell by 5.94 million barrels in the week ended

Nov. 22, exceeding analyst expectations of a drop of about

600,000 barrels.