Home Investing News Oil prices settle lower despite simmering Middle East tensions

Oil prices settle lower despite simmering Middle East tensions


Investing.com– Oil prices steadied Tuesday, with the focus remaining on renewed ceasefire talks between Israel and Hamas, while anticipation of key economic data this week has kept sentiment subdued.

At 09:00 ET (13:00 GMT), West Texas Intermediate crude futures traded largely unchanged at $86.42 a barrel, while Brent oil futures expiring in June rose 0.1% to $90.47 a barrel.

Crude markets saw some profit-taking on Monday, amid reports that Israel had withdrawn troops from some parts of Gaza, while also meeting with Hamas in Egypt for new ceasefire talks. But oil prices remained close to five-month peaks as the prospect of an immediate ceasefire remains fleeting, given that the two parties have failed to reach an agreement despite repeated efforts to broker peace. 

Additionally, the prospect of Iran potentially opening up a new front against Israel also remained in play. 

Oil markets keep Middle East tensions in focus 

Fears of worsening geopolitical conditions in the Middle East have been a key point of support for crude over the past month, especially as Iran threatened military action against Israel over an alleged strike on an embassy in Syria. 

Houthi strikes on vessels in the Red Sea have already disrupted some oil supplies, and any more supply disruptions are likely to further tighten global oil markets.

The outlook for oil markets had already been tightened by the Organization of Petroleum Exporting Countries and allies recently maintaining its pace of production cuts until end-June. 

Inflation data, rate signals also in focus

That said, the anticipation of key inflation data from the U.S. and China has limited any major moves in crude prices. 

U.S. consumer price index inflation data is due on Wednesday and is widely expected to factor into the Federal Reserve’s outlook on interest rates. The minutes of the Fed’s March meeting are also due on Wednesday.

Chinese consumer and producer inflation readings are due on Thursday, and are expected to offer more cues on a deflationary trend in the world’s largest oil importer.

The readings are also expected to offer more cues on the Chinese economy after some positive purchasing managers index readings for March.

Traders will also be keeping an eye on the latest industry data on the state of the U.S. crude stockpiles, with the American Petroleum Institute set to release its weekly numbers later in the session.

The inventories fell more than expected last week, the API reported Tuesday, adding optimism to tighter supply bets just as expectations for improved demand gather pace. 

(Ambar Warrick contributed to this article.)

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