Oil prices edged lower on Tuesday as market sentiment was buoyed by news that Israel had accepted a proposal addressing key disagreements hindering a ceasefire deal in Gaza. This development alleviated concerns about potential supply disruptions in the Middle East, leading to a decline in both Brent and U.S. crude prices.
Brent crude fell by 53 cents, or 0.7%, to $77.13 per barrel by 0320 GMT. Meanwhile, front-month U.S. West Texas Intermediate (WTI) crude futures, which are set to expire on Tuesday, dropped by 50 cents, or 0.7%, to $73.87 per barrel. The more actively traded second-month contract also decreased by 49 cents, or 0.7%, settling at $73.17 per barrel.
The decline follows a sharp drop in prices on Monday, when Brent crude fell by about 2.5% and WTI eased by 3%. The downward trend in oil prices has been influenced by a combination of easing geopolitical risks in the Middle East and growing concerns over China’s economic outlook, which could dampen global oil demand.
“Prices seem to find some headwinds from geopolitical developments in the Middle East and China’s demand outlook,” said Yeap Jun Rong, a market strategist at IG. He noted that the likelihood of a ceasefire deal in Gaza had increased, prompting market participants to reassess the risks of geopolitical tensions affecting oil supply.
In addition to the easing tensions in the Middle East, weak economic data from China has raised doubts about the strength of the country’s oil demand, further contributing to the softness in prices. As traders monitor these developments, the oil market remains sensitive to shifts in both geopolitical dynamics and global economic indicators.
