Oil prices up as geopolitical tensions continue
HOUSTON — Oil prices settled higher on Tuesday as geopolitical tensions continued in the Middle East and eastern Europe, but gains were curtailed as investors reined in expectations for the US Federal Reserve interest rate cuts.
Brent futures settled 77 cents higher or 0.94% at $82.77 a barrel at 2:30 p.m. EST (19:32 GMT). US West Texas Intermediate (WTI) crude settled 95 cents higher or 1.24% at $77.87 a barrel.
On Monday, oil prices were near flat after gaining 6% last week, with the conflict in the Middle East keeping prices elevated.
The US rejected Russian President Vladimir Putin’s suggestion of a ceasefire in Ukraine, according to sources.
The rejection “punctuates that there is not really an end game in terms of a ceasefire or a peace deal until Ukraine gets what it wants,” said John Kilduff, partner at New York-based Again Capital.
Fears of further escalation of the war in the Middle East also stoked worries about the oil supply outlook.
Talks involving the US, Egypt, Israel, and Qatar on a Gaza truce ended without a breakthrough as calls grew for Israel to hold back on a planned assault on the southern end of the enclave, crammed with over a million displaced people.
Yemen’s Iran-aligned Houthis have kept up attacks in the Red Sea, claiming solidarity with Palestinians and striking vessels with commercial ties to the US, Britain, and Israel.
Indicating tighter supply, the premium of the WTI front-month over the seventh month and 13th month held at a three-month high. The premium of the Brent front-month over the seventh month was at its highest in more than two months.
A US government report showed consumer inflation stayed elevated last month. Fed policy makers are now expected to wait longer before cutting interest rates. This could dampen economic growth and oil demand, and it also boosted the dollar to three-month peaks, which reduces demand for oil among buyers paying in other currencies.
US crude oil inventories rose last week, while fuel stockpiles fell, according to market sources citing American Petroleum Institute figures released late on Tuesday. —