Oil prices higher as Middle East ceasefire hopes wane
Oil prices rose on Tuesday after hopes diminished that negotiations between Israel and Hamas would lead to a ceasefire in Gaza amid concerns the lingering conflict could potentially disrupt supply from the key Middle East producing region.
Brent crude futures rose 14 cents to $90.52 a barrel by 0610 GMT. US West Texas Intermediate (WTI) crude was 10 cents higher at $86.53.
A fresh round of Israel-hamas ceasefire discussions in Cairo had ended a multi-session rally on Monday, leading Brent to its first decline in five sessions and WTI to its first in seven on the prospect that geopolitical risks could ease.
But Israeli Prime Minister Benjamin Netanyahu said on Monday an unspecified date had been set for Israel’s invasion of the Rafah enclave in Gaza.
That is “ending the hopes that briefly gripped the market yesterday that geopolitical tensions in the region might be easing,” Tony Sycamore, a market analyst with IG, wrote in a note.
“The positive geopolitical risk premium is indeed supporting the current mediumterm uptrend phase of oil,” said Kelvin Wong, a senior market analyst at OANDA in Singapore.
India’s fuel demand hit a record high in the 2024 fiscal year driven by higher gasoline and jet fuel consumption, data showed on Monday.
An improvement in Chinese manufacturing activity announced last week is also expected to boost fuel demand. This week, the market will be watching inflation data due from the US and China for further signals on the economic direction of the world’s top two oil consumers.
In the Americas, Mexico’s state oil company Pemex said it would reduce crude exports by 330,000 barrels per day so it can supply more to domestic refineries, cutting the supply available to the company’s US, European and Asian buyers by onethird.