Home Investing News Oil prices settle lower on growing hopes for Gaza ceasefire, stronger dollar

Oil prices settle lower on growing hopes for Gaza ceasefire, stronger dollar


Oil prices settle lower on growing hopes for Gaza ceasefire, stronger dollar By Investing.com

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AuthorYasin EbrahimCommodities

Published Mar 20, 2024 10:18PM ET
Updated Mar 21, 2024 05:17PM ET

© Reuters.

Investing.com– Oil prices settled lower Thursday, as growing expectations for a Gaza ceasefire and a stronger dollar weighed, though the prospect of tighter supplies continued to offer support. 

At 14:30 ET (18:30 GMT), the U.S. crude futures settled 0.3% lower at $81.07 a barrel and the Brent contract dropped 0.3% to $85.67 a barrel. 

Growing Gaza ceasefire hopes, stronger dollar

Expectations for Israel-Hamas ceasefire were boosted by Reuters report that the U.S. is set to table a U.N. draft resolution on Friday demanding an immediate ceasefire in Gaza lasting about six weeks. 

The ongoing Israel-Hamas war has continued to threaten the risk of broader conflict in the Middle East that many fear would disrupt crude supplies in the oil rich region.   

Profit taking was also attributed to the weaker session for oil prices, which have moved into overbought territory, ING said. 

“The rally in oil has started to fade with the market in overbought territory and little in the way of a fresh catalyst to keep the upward momentum going,” said analysts at ING, in a note.

The dollar, meanwhile, rebounded from a slip on Wednesday following weakness in the pound as the Bank of England delivered a dovish pause. 

The remaining two hawkish monetary policy committee members dropped their call for rate cuts, stoking investors bets that the central bank is likely to cut rates in June, sending the GBP/USD nearly 1% lower. 

Supply outlook remains tight, US inventories shrink

Expectations of tighter oil supplies, which were a key driver of crude gains in the past two weeks, remained largely in play. Official U.S. inventory data showed on Wednesday that crude oil inventories shrank more than expected in the week to March 15.

The draw was driven by increased refinery activity and higher oil exports.

A bigger-than-expected draw in gasoline inventories also signaled that fuel demand was picking up from a winter lull.

Adding to recent optimism that supply and demand is coming into balance, the slew of recent Ukrainian drone strikes  has taken out about 12% of Russia’s total oil processing capacity, ANZ Research said, and will likely tighten “the market amid the ongoing cutbacks from OPEC.”

(Ambar Warrick contributed to this article.)

Oil prices settle lower on growing hopes for Gaza ceasefire, stronger dollar

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