Brent sheds on news of a possible ceasefire in Gaza

The front-month ICE Brent contract shed $0.12/bbl on the day, to trade at $85.77/bbl at 09.00 GMT.

PHOTO: Refinery and oil storage tanks with Long Beach, California in the background. Getty Images

Upward pressure:

Oil market analysts have maintained a positive outlook following the US Federal Reserve's (Fed) reiterating its plan to cut interest rates three times this year, signalling an increase in demand growth from the world’s largest crude oil consumers.

The Fed's indication of potential rate cuts three times this year has sparked optimism in the market, according to SPI Asset Management’s managing partner Stephen Innes. He noted that such signals are typically viewed as favourable for oil sales and the global economy.

Supply-side concerns have supported Brent's upward momentum further this week. The extension of OPEC+ supply cuts until the end of June, combined with a series of Ukrainian drone attacks on Russian energy facilities and ongoing unrest in the Red Sea, have contributed to keep Brent futures above $85/bbl.

Saxo Bank's strategy team highlighted that concerns over the interest rate outlook and supply tightness are continuing to bolster prices.

Downward pressure:

Brent futures have come down following speculations regarding a potential ceasefire agreement between Israel and Hamas.

Analysts suggest that a ceasefire in the Gaza Strip could alleviate geopolitical tensions in the Middle East and ease supply constraints in the oil market, which could potentially put downward pressure on the price of Brent crude.

The US has submitted a draft resolution to the United Nations Security Council (UNSC) calling for an immediate ceasefire. US Secretary of State Anthony Blinken expressed optimism that ongoing discussions and negotiations in Qatar could lead to an agreement between Israel and Hamas.

The draft resolution submitted by the United States to the UNSC has triggered a bull market squeeze, Innes said. A bull squeeze is a market situation when sudden price declines incite traders and money managers to liquidate their long positions to avoid losses.

By Tuhin Roy

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