Israel Strikes Gaza, Oil Prices Edge Higher
In a dramatic turn of events, oil prices inched up on Tuesday after Israel launched strikes in Rafah, Gaza. The ongoing negotiations for a ceasefire with Hamas have hit a roadblock, keeping market participants on edge, as reported by Reuters.
Market Reaction and Forecast
Brent crude futures saw a 0.11 percent increase, reaching $83.42 per barrel, while US West Texas Intermediate crude futures also rose by 0.09 percent to $78.55 a barrel. Market strategist at IG, Yeap Jun Rong, noted that the ceasefire talks’ uncertainty led to the rise in oil prices, with traders preparing for potential geopolitical tensions to persist.
Looking ahead, market participants are eagerly anticipating the upcoming US crude inventories data releases, with expectations of a decline in stockpiles based on a preliminary Reuters poll.
Impact of the Dollar and Recent Market Trends
A stronger dollar during the session limited gains in oil futures, making crude more expensive for traders holding other currencies. The recent market focus on weak US jobs data and the possibility of a Federal Reserve interest rate cut had led to last week’s steepest weekly losses in three months.
Geopolitical Tensions and Supply Concerns
The lack of resolution in the seven-month long conflict between Israel and Hamas has provided support to oil prices, with concerns rising over potential disruptions in Middle Eastern crude supplies. Israel’s continued strikes in Rafah, Gaza, have further escalated tensions in the region.
Saudi Arabia’s decision to raise the official selling prices for its crude sold to various regions in June has also bolstered oil prices, indicating expectations of strong demand in the upcoming summer months. The world’s top exporter increased its flagship Arab Light crude oil price to Asia, reaching $2.90 a barrel above the Oman/Dubai average in June.