US inflation data and little prospect of rate cuts help crude oil stability.
The prices of Petroleum barely changed on Monday, as peace talks between Israel and Hamas in Cairo mitigated fears of a broader conflict in Middle East, while inflation data from USA dimmed prospects for short-term interest rate cuts.
By midmorning, June Brent futures, which expire Tuesday, were down 51 cents, or 0.6%, at $88.99 a barrel. The most active contract for July fell 27 cents, or 0.3%, to $87.94. For their part, the futures of West Texas Intermediate in United States (WTI) down 22 cents, or 0.3%, to $83.63.
Intensifying efforts to mediate a ceasefire between Israel and Hamas moderated geopolitical tensions and contributed to Monday’s weak open, according to IG market analyst Tony Sycamore. A delegation of Hamas visit Cairo on Monday to hold peace talks, a Hamas official told Reuters.
Meanwhile, the minister of Foreign Affairs Israel said Saturday that a planned raid on Rafah, where more than a million displaced Palestinians are sheltered, could be postponed if a deal is reached involving the release of Israeli hostages. “With little fresh news, the possible cooling of the environment of Loop causes oil prices to go down,” said John Evans of brokerage PVM.
The incidence of the United States
The markets are also awaiting the review of the monetary policy of the Federal Reserve American May 1st. “All market participants will be taking a close look at the language and forecasts,” Evans said.
“The nerves before this week’s meeting of the Federal Open Market Committeewhich is expected to have a tougher tone,” Sycamore said. US inflation rose 2.7% in the 12 months through March, according to data on Friday, above the 2% target of the Federal Reserve.
Lower inflation would have increased the likelihood of interest rate cuts, which would stimulate economic growth and oil demand. According to Tina Teng, an independent market analyst, “persistent US inflation raises fears of higher interest rates for longer”, which translates into a strengthening of the dollar and puts pressure on commodity prices. The dollar strengthened on the prospect of higher long-term interest rates. A dollar The stronger the price of oil for holders of other currencies.
Inflation data in USA announcements on Friday put a damper on expectations of rate cuts in the near future. Lower inflation would have increased the likelihood of rate cuts, which tend to stimulate economic growth and oil demand.
Source: Ambito
