Oil prices down on Gaza ceasefire talks, flat on the week

Oil prices down on Gaza ceasefire talks, flat on the week

/ 09:14 AM March 23, 2024

An aerial view shows Majnoon oil field near Basra

FILE PHOTO: An aerial view shows Majnoon oil field near Basra, Iraq, May 12, 2023. REUTERS/Essam Al-Sudani/File Photo

NEW YORK — Oil prices slipped on Friday and were flat on the week as the possibility of a ceasefire in Gaza weakened crude benchmarks, while the war in Europe and shrinking U.S. rig count cushioned the fall.

Brent futures for May delivery settled at $85.43, losing 35 cents. U.S. crude settled at $80.63 a barrel, falling 44 cents. Both benchmarks logged less a than 1% change on the week.


“Everyone is watching for what the weekend will bring with Gaza,” said John Kilduff, partner with Again Capital LLC, adding that successful peace talks would prompt Yemen’s Houthi rebels to allow oil tankers to pass through the Red Sea.


READ: Oil prices rise on tighter supply, geopolitical risks

U.S. Secretary of State Antony Blinken said on Thursday he believed talks in Qatar could reach a Gaza ceasefire agreement between Israel and Hamas.

Blinken met Arab foreign ministers and Egypt’s President Abdel Fattah El-Sisi in Cairo as negotiators in Qatar centred on a truce of about six weeks.

Meanwhile, the U.S. dollar was set for a second week of broad gains after the Swiss National Bank’s surprise interest rate cut on Thursday bolstered global risk sentiment.

A stronger dollar makes oil more expensive for investors holding other currencies, dampening demand.

While a possible ceasefire meant crude might move more freely globally, a lower U.S. oil rig count and the potential for easing U.S. interest rates helped support prices.


“We are still keeping fresh highs on the table given broad-based expansion in risk appetite that accelerated following the mid-week Fed comments that proved less hawkish than anticipated,” said Houston-based Jim Ritterbusch, of Ritterbusch and Associates.

U.S. equities, which tend to move in correlation with oil prices, hit record highs after the Federal Reserve ended its regular meeting with no change in U.S. rates on Wednesday.

The U.S. oil rig count fell by one to 509 this week, according to Baker Hughes data, indicating lower future supply.

Money managers, meanwhile, upped their net long U.S. crude futures and options positions last week, the U.S. Commodity Futures Trading Commission (CFTC) said, with combined futures and options positions in New York and London rising by 57,394 contracts to 202,624.

The conflict in Eastern Europe also kept oil prices from moving lower. Russia launched the largest missile and drone attack on Ukrainian energy infrastructure of the war to date on Friday, hitting the country’s largest dam and causing blackouts in several regions, Kyiv said.

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However, chatter has emerged within the market that Russia would further discount its barrels in light of the escalation, said Bob Yawger, director of energy futures at Mizuho. A steeper discount could make Russian crude more attractive to international buyers.

TAGS: Gaza Strip, oil

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