Oil Prices Fluctuate on Gaza Ceasefire Talks
Oil Prices Rise and Fall
Brent and US crude futures initially surged over $1 a barrel on Tuesday following the U.S. Energy Department’s announcement that crude oil production would grow less than expected. However, the gains were later trimmed due to speculation about a potential prolonged ceasefire in the Gaza War.
Energy Department’s Forecast
The U.S. Energy Department, in its Short-Term Energy Outlook, revised its earlier forecast for U.S. crude oil output growth, projecting an increase of 170,000 barrels per day (bpd) instead of the previously anticipated 290,000 bpd.
Antony Blinken’s Efforts
U.S. Secretary of State Antony Blinken, currently on a mission to negotiate an end to the Gaza War, revealed that Hamas was reviewing a proposal for a ceasefire, sparking cautious optimism in the market.
Market Speculation
While some analysts expressed optimism about a potential ceasefire, others remained skeptical about the situation in the Middle East and the possibility of a deal being reached.
Inventory Data and Production Limitations
Inventory data expected to be released later this week is anticipated to show continued high stockpiles of gasoline and diesel, although future inventories are predicted to tighten. Refinery maintenance and recent production limitations, including the BP refinery outage in Indiana, are contributing factors.
Geopolitical Tensions
The United States’ ongoing confrontation with Iran-backed Houthis in Yemen, whose attacks on shipping vessels have disrupted global oil trading routes, has added to geopolitical tensions impacting oil prices.
Impact of Souring Demand Expectations
Despite these geopolitical factors, souring demand expectations have tempered the gains in oil prices. Analysts believe that the U.S. economic indicators, which have shown signs of weakening, could lead to a decline in oil demand in the long term.
