Oil prices witnessed a slight increase, recovering some of the lost ground. The focus remained on the renewed ceasefire talks between Israel and Hamas, while anticipation of important economic data for the week kept market sentiment subdued.
Read more: Oil prices decline as Middle East tensions ease: Brent crude falls below $90
On Monday, there was some profit-taking in crude markets as reports emerged that Israel had withdrawn troops from certain parts of Gaza and engaged in ceasefire talks with Hamas in Egypt. However, oil prices remained near five-month highs due to the deadlock in the Israel-Hamas negotiations and the uncertainty surrounding the potential escalation of tensions.
These factors contributed to the positive performance of crude on Tuesday. Brent oil futures expiring in June rose by 0.6 percent to reach $90.89 per barrel, while West Texas Intermediate (WTI) crude futures increased by 0.6 percent to reach $86.0 per barrel at 20:51 ET (00:51 GMT).
The ongoing tensions in the Middle East provided support for crude prices in the past month. The lack of an immediate ceasefire agreement between Israel and Hamas, despite efforts by the U.S. and its allies, added to the concerns.
Supply disruptions
The belief that the deteriorating conditions in the Middle East will disrupt oil production in the region also helped bolster oil prices. Strikes on vessels in the Red Sea have already caused disruptions in oil supplies.
Further supply disruptions have the potential to tighten global oil markets even more. The Organization of Petroleum Exporting Countries (OPEC) and its allies recently decided to maintain their production cuts until the end of June, which further tightened the outlook for oil markets.
Key inflation data from the U.S. and China
In addition to geopolitical factors, the anticipation of key inflation data from the U.S. and China also influenced crude prices. The upcoming release of the U.S. consumer price index inflation data, scheduled for Wednesday, is expected to impact the Federal Reserve’s outlook on interest rates. The minutes of the Fed’s March meeting are also set to be released on the same day.
Chinese consumer and producer inflation readings, due on Thursday, are anticipated to provide further insights into the deflationary trend in the world’s largest oil importer. These readings will also offer more information about the Chinese economy following some positive purchasing managers index readings in March.
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