Oil prices fell on Tuesday after Israel accepted a proposal to narrow differences holding up a ceasefire in Gaza, helping ease concerns about supply disruptions in the Middle East.
price movement
Brent crude futures fell 12 cents, or $2.02, or 0.15 percent, to $77.54 a barrel. U.S. West Texas Intermediate (WTI) crude futures for the front month, which expire on Tuesday, were at $74.23 a barrel, down 14 cents, or 0.2 percent. The more actively traded second-month contract fell 15 cents, or 0.2 percent, to $73.52.
Brent fell about 2.5 percent on Monday, while West Texas Intermediate crude fell 3 percent.
Rough suggestion
US Secretary of State Antony Blinken said yesterday that Israeli Prime Minister Benjamin Netanyahu had accepted a rough proposal made by Washington to address the differences holding up a ceasefire agreement in Gaza, and urged Hamas to accept it as well.
But there are few signs of the war abating or of fears of its expansion receding, with Hamas announcing the resumption of suicide bombings inside Israel after many years, claiming responsibility for an explosion in Tel Aviv on Sunday night, and medics saying Israeli military strikes killed at least 30 Palestinians in the Gaza Strip yesterday.
Supply concerns ease
Supply concerns were also eased by a rise in output from Libya's Sharara oil field to around 85,000 barrels per day in a move aimed at supplying the Zawiya oil refinery, two engineers working at the field told Reuters on Monday.
Libya's National Oil Corporation declared force majeure on oil exports from the field on August 7 after a blockade by protesters reduced production at the field, which normally stands at 300,000 barrels per day.
In the United States, a preliminary Reuters poll yesterday indicated that crude inventories are expected to have fallen by 2.9 million barrels last week.
On the demand side, concerns about China’s economic troubles also weighed on oil prices. After a bleak second quarter, the world’s second-largest economy lost further momentum in July as new home prices fell at the fastest pace in nine years, industrial production slowed, exports and investment growth fell and unemployment rose.
Anticipating interest rate cut
Meanwhile, investors are also awaiting an indication of the Federal Reserve's plans for its next interest rate decision.
The bank will cut interest rates by 25 basis points at each of the three remaining meetings in 2024, a bigger cut than expected last month, according to a narrow majority of economists polled by Reuters who said a recession was unlikely.
Federal Reserve Chairman Jerome Powell will speak in Jackson Hole on Friday and investors assume he will make a case for a rate cut.
Lower interest rates reduce borrowing costs and could boost demand for oil in the world's largest oil consumer.
