May 21, 2024
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OIL & GAS RENEWABLE ENERGY

Oil Prices Surge as Hopes for Middle East Ceasefire Fade

As all hopes are lost again for a ceasefire in Gaza and ease on tensions in the middleeast, prices of oil are seen to have gone higher on Tuesday.

Brent crude futures rose 28 cents to $90.66 a barrel by 0330 GMT. U.S. West Texas Intermediate (WTI) crude was 21 cents higher at $86.64.

After another round of of Israel-Hamas ceasefire discussions in Cairo had ended a multi-session rally on Monday, leading Brent to its first decline in five sessions and WTI to its first in seven on the prospect that geopolitical risks could ease.

However, Benjamin Netanyahu announced intensions to invade the Rafah enclave in Gaza, “ending the hopes that briefly gripped the market yesterday that geopolitical tensions in the region might be easing,” Tony Sycamore, a market analyst with IG, wrote in a note.

Hamas said early on Tuesday that Israel’s proposal it received from Qatari and Egyptian mediators did not meet any of the demands of Palestinian factions. But Hamas said it would study the proposal before responding to the mediators.

Oil market continue to suffer the risk of supply disruptions. An Iranian response to Israel’s suspected attack on its consulate in Syria “could drag the oil market into the conflict, after being largely unimpacted since Hamas’s attack on Israel,” ANZ analysts said in a client note, as gathered by Reuters.

“The positive geopolitical risk premium is indeed supporting the current medium-term uptrend phase of oil,” said Kelvin Wong, a senior market analyst at OANDA in Singapore.

However, important giants are supportive of oil prices. India’s fuel demand hit a record high in the 2024 fiscal year driven by higher gasoline and jet fuel consumption, data showed on Monday. An improvement in Chinese manufacturing activity announced last week is expected to boost fuel demand.

In the Americas, Mexico’s state oil company Pemex said it would reduce crude exports by 330,000 barrels per day so it can supply more to domestic refineries, cutting the supply available to the company’s U.S., European and Asian buyers by one-third.

 

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