Oil prices dipped on Monday after four weeks of gains, as concerns over supply disruptions eased amid hopes for a ceasefire deal in Gaza. However, the potential impact of Hurricane Beryl on supplies limited the decline.
By 12:30 GMT, Brent crude futures had fallen 42 cents, or 0.5%, to $86.12 a barrel. U.S. West Texas Intermediate (WTI) crude dropped 52 cents, or 0.63%, to $82.64 a barrel.
“Crude oil exhibited significant volatility, slipping from its highs amid ceasefire talks between Israel and Gaza. The Israeli Prime Minister’s office announced on Friday that the head of Israel’s Mossad had returned from Doha after an initial meeting with Gaza mediators. They are attempting to reach a ceasefire and hostage release deal, with negotiations set to resume next week. Following this news, the risk premium on crude oil eased in the international markets. Also, crude oil prices declined due to downbeat U.S. job data and increased concerns about oil demand. However, a weaker dollar index and stronger euro and pound sterling supported prices at lower levels. We expect crude oil prices to remain volatile in today’s session. Crude oil has support at $82.10-81.50 and resistance at $83.24-83.70,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
What’s weighing on crude oil prices?
Negotiations for a U.S.-proposed ceasefire to end the nine-month-old conflict in Gaza are currently underway, with Qatar and Egypt acting as mediators.
Meanwhile, in the U.S., Hurricane Beryl made landfall near Matagorda, Texas on Monday. In preparation for the hurricane, the ports of Corpus Christi, Houston, Galveston, Freeport, and Texas City closed on Sunday.
Texas is the largest producer of oil and natural gas in the U.S. Port closures could temporarily halt crude and liquefied natural gas exports, disrupt oil shipments to refineries, and affect motor fuel deliveries from those facilities, according to analysts.
WTI rose by 2.1% last week after Energy Information Administration data revealed a decline in crude and refined product stockpiles for the week ending June 28.
IG’s Sycamore noted a strong possibility of another significant weekly draw in U.S. oil inventories amid peak driving season.
Investors were also monitoring potential impacts on geopolitics and energy policies from last week’s elections in the UK, France, and Iran.