Oil prices edged slightly lower on Thursday after Israel and the Palestinian terror group Hamas signed an agreement to cease fire in Gaza.
Brent crude futures were down $1.08, or 1.6 per cent, at $65.18 a barrel at 13:10 ET (17:10 GMT). US West Texas Intermediate (WTI) crude was down $1.05, or 1.7 per cent, at $61.49 a barrel.
Israel and Hamas signed an agreement on Thursday to cease fire and release Israeli hostages in exchange for Palestinian prisoners, forming the first phase of US President Donald Trump's initiative to end the war in Gaza.
Under the ceasefire deal, fighting will cease, Israel will partially withdraw from Gaza, and Hamas will free all remaining hostages captured during the initial attack, in exchange for hundreds of prisoners held by Israel.
“Crude futures are in a corrective phase as the Israel/Hamas conflict looks to be ending,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Wide-ranging implications for oil markets
“The peace agreement is a major breakthrough in recent Middle Eastern history – its implications for oil markets could be wide-ranging, from the possibility of a decrease in the Houthis’ attacks in the Red Sea to an increase in the likelihood of a nuclear deal with Iran,” Rystad Energy’s Chief Economist Claudio Galimberti said in a note.
The OPEC+ group, comprising the Organization of the Petroleum Exporting Countries and its allies, agreed on Sunday to a November output hike smaller than market expectations, easing oversupply concerns.
Prices had gained around one per cent on Wednesday to reach a one-week high after investors viewed stalled progress on a Ukraine peace deal as a sign that sanctions against Russia, the world’s second-largest oil exporter, would continue.
Meanwhile, a Republican bill to fund the US Government and end a shutdown was falling short of the votes needed for passage in the Senate on Thursday. A prolonged shutdown could dampen the economy and hurt oil demand.
Federal Reserve Governor Michael Barr said the US central bank should move cautiously on further interest rate cuts, noting that lower borrowing costs typically boost demand for oil and push prices higher.
Indian Prime Minister Narendra Modi said he spoke to US President Donald Trump on Thursday, adding that they “reviewed good progress achieved in trade negotiations” and agreed to stay in close touch over the coming weeks.
Trump has imposed a 50 per cent tariff on most exports from India, among the highest for any US trading partner. The tariffs were doubled from 25 per cent over New Delhi’s continued imports of Russian oil.
The US also imposed sanctions on about 100 individuals, entities, and vessels, including a Chinese independent refinery and terminal, that helped Iran’s oil and petrochemicals trade, the Trump administration said on Thursday.
(Reporting by Stephanie Kelly in London, Florence Tan in Singapore and Georgina McCartney in Houston; Editing by Mark Potter, Jane Merriman, Nick Zieminski, William Maclean and David Gregorio)