Oil falls on renewed push for Middle East ceasefire

OIL prices fell on Monday (Apr 8), ending a multi-session rally after Israel reduced its troops in southern Gaza and began a fresh round of ceasefire talks with Hamas.

Brent crude futures fell 79 US cents, or 0.9 per cent, to settle at US$90.38 a barrel and US West Texas Intermediate (WTI) crude closed down 48 US cents, or 0.6 per cent, at US$86.43. It was the first decline in five sessions for Brent and the first in seven for WTI.

Israel and Hamas opened a fresh round of Gaza ceasefire talks on Sunday, but a Hamas official said the talks remained deadlocked. Both benchmarks slumped by more than US$2 during the session, with investors focusing on Israel’s decision to withdraw more soldiers from southern Gaza.

Israel’s decision “has reduced somewhat the geopolitical risk premium”, UBS analyst Giovanni Staunovo said.

Also weighing on oil prices were expectations that US crude oil stocks likely rose last week, Staunovo said.

Crude oil benchmarks bounced off session lows after Israeli Prime Minister Benjamin Netanyahu said a date was set for an invasion of Rafah, indicating the conflict is far from resolved, said Andrew Lipow, president of Lipow Oil Associates.

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The decline in oil prices is also capped by uncertainty around how Iran will respond to the bombing of its consulate in Syria last week, he added.

Tehran has said it will take revenge, feeding concern that the Middle East conflict could broaden. Crude benchmarks jumped 4 per cent last week, with Brent futures rising for the fourth consecutive week – the longest rally since August last year.

Among factors affecting oil’s demand outlook, a US employment report on Friday suggested the economy ended the first quarter on solid ground, which could prompt the Federal Reserve to delay interest rate cuts.

Investors will scour consumer price index data from the US and China this week for further clues on economic health of the world’s top two oil consumers. REUTERS