Brent slumps on ceasefire talks and US crude stock build anticipation
The front-month ICE Brent contract lost $3.52/bbl on the day, to trade at $85.17/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Geopolitical tensions and repeated missile attacks on commercial vessels in the Red Sea have fuelled concerns about global oil supply disruptions, supporting Brent prices in recent weeks.
Houthis recently targeted a container ship with a drone attack in the Indian Ocean. The repeated attacks by the group continue to threaten commercial vessels navigating through these waters.
Israeli Prime Minister Benjamin Netanyahu has vowed to go ahead with the assault on the southern Gaza city of Rafah, irrespective of Hamas response to the latest ceasefire proposals. Netanyahu's determination to continue operations in Rafah could heighten Israel-Gaza tensions and disrupt ceasefire talks, impacting the global supply chain.
Downward pressure:
The recent push by Egypt to revive negotiations between Israel and Palestine has raised hopes for a ceasefire agreement. This renewed effort to facilitate a peace agreement has put downward pressure on oil prices.
“The crude market is weighed down by continued hopes for a ceasefire,” Ole Hansen of Saxo Bank told Reuters.
The US central bank’s Federal Open Market Committee (FOMC) is set to conclude its latest two-day policy meeting later today. The market anticipates that the central bank may keep interest rates unchanged.
“Stubborn U.S. inflation has further reduced rate cut expectations,” Hansen added.
“Continued signs of inflation also raised concerns about demand for crude oil. This comes ahead of the U.S. driving season, where demand for gasoline rises strongly,” ANZ Bank’s senior commodity strategist Daniel Hynes commented.
Expectations of a surge in US crude oil inventories have also weighed on market sentiment. US commercial crude oil stocks rose by 4.9 million bbls in the week ended 26 April, according to the American Petroleum Institute (API) estimates cited by Trading Economics.
By Tuhin Roy
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