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HomeBusinessOil prices dip as Gaza ceasefire talks ease geopolitical tensions

Oil prices dip as Gaza ceasefire talks ease geopolitical tensions

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Oil prices dipped on Monday after a four-week rise, as the prospect of a ceasefire deal in Gaza eased geopolitical tensions in the Middle East. Investors also assessed potential disruptions to U.S. energy supplies from Tropical Storm Beryl.

Brent crude futures were down 12 cents, or 0.1%, at $86.42 a barrel as of 0234 GMT. U.S. West Texas Intermediate (WTI) crude fell 28 cents, or 0.3%, to $82.88 a barrel.

Talks over a U.S. ceasefire plan aimed at ending the nine-month-old war in Gaza are under way, mediated by Qatar and Egypt. “If anything concrete comes from the ceasefire talks, it will take some of the geopolitical bid out of the market for now,” said IG analyst Tony Sycamore based in Sydney.

Meanwhile, the ports of Corpus Christi, Houston, Galveston, Freeport, and Texas City closed on Sunday in preparation for Tropical Storm Beryl. The storm could grow into a Category 2 hurricane after making landfall on the Texas coast between Galveston and Corpus Christi later on Monday.

Port closures could temporarily halt crude and liquefied natural gas exports, oil shipments to refineries, and motor fuel deliveries from those plants.

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“While this puts some offshore oil and gas production at risk, the concern when the storm makes landfall is the potential impact it could have on refinery infrastructure,” ING analysts led by Warren Patterson said in a note. “Any meaningful disruptions to Texas refinery operations will likely support refined product cracks.”

Sycamore noted that U.S. data might show another large weekly draw in oil inventories amid peak driving season, which will support oil prices. WTI gained 2.1% last week after data from the Energy Information Administration showed stockpiles for crude and refined products fell in the week ended June 28.

“WTI has had a very good run, though, having rallied 15% from the early June low,” Sycamore said, adding that the benchmark could see strong resistance between $85.50 and $87.50 based on technical charts.

The number of operating oil rigs in the U.S. remained unchanged at 479 last week, holding at its lowest since December 2021, according to Baker Hughes’ weekly report on Friday.

Oil prices were also supported last week by hopes of interest rate cuts, following U.S. data on Friday that showed easing inflation and slowing job growth. Lower interest rates can boost economic activity and increase crude oil demand.

Investors were also watching for any impact from recent elections in the UK, France, and Iran on geopolitics and energy policies. France faced potential political deadlock after elections on Sunday resulted in a hung parliament, while Iranians chose Masoud Pezeshkian as their new president, a relative moderate who beat a hard-line rival in the election.

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