Oil prices fell more than $1 a barrel on Monday as tensions in the Middle East eased after Israel withdrew more troops from southern Gaza and pledged to begin new talks on a possible ceasefire in the six-month conflict. Israel withdraws more troops from southern Gaza and Hamas sends teams to negotiate a potential ceasefire.
Brent fell below $90. Brent crude futures were down $1.48, or 1.6%, at $89.69 a barrel by 06:15 GMT. West Texas Intermediate crude oil (WTI) fell $1.37, or 1.5%, to $85.54 per barrel.
Israel said it was withdrawing all but one brigade of its troops from the southern Gaza strip in response to growing international pressure and to ease tensions after the killing of senior Iranian commanders in Syria last week. However, this may only be a temporary retreat as this action does not offer any fundamental change.
Israel and Hamas sent teams to Egypt for new talks on a potential ceasefire ahead of the Eid holiday. This eased tensions in the Middle East that caused oil prices to rise more than 4% last week due to supply disruption concerns.
Saudi Arabia, the world’s largest oil exporter, increased the official sales prices of all crude grades to Asia in line with expectations in May, following the contraction in heavy oil supply.
A fire broke out on Saturday on an offshore platform operated by Pemex, Mexico’s national oil company. This comes after Pemex asked its trading body to cancel up to 436,000 barrels per day of crude exports in April.
However, Brent is expected to remain below $100 per barrel in the baseline scenario, which assumes demand is already strong, no further geopolitical blows to oil supply are expected, and increased spare capacity will lead OPEC+ to increase production in the third quarter.
Baker Hughes said in its report on Friday that oil rigs in the US increased by two to 508 last week, while gas rigs decreased by two to 110, recording the lowest level since January 2022.
Friday’s U.S. jobs report beat expectations, ending the economy’s first quarter on solid ground and strengthening expectations that the Fed could potentially delay interest rate cuts expected this year.
Investors will be monitoring the consumer price index data from the U.S. and China later this week for more clues about the timing of possible Fed rate cuts.
