Singapore — Oil prices fell on Thursday after Israel and Hamas agreed to the first phase of a plan to end the war in Gaza, easing geopolitical tension in the Middle East, while the dollar’s strength weighed on commodities.
Brent crude futures were down 34c, or 0.51%, at $65.91 a barrel by 4.13am GMT. US West Texas Intermediate (WTI) crude fell 38c, or 0.61%, to $62.17.
“WTI crude is trading on the weaker side of the pendulum today due to a reduction in geopolitical risk premium triggered by the Israel-Hamas peace deal,” Oanda’s senior market analyst Kelvin Wong said.
US President Donald Trump said that Israel and Hamas had reached a long-sought deal for a Gaza ceasefire and hostage release under a plan for ending the two-year-old war in the Palestinian enclave.
Israeli Prime Minister Benjamin Netanyahu said he would convene the government on Thursday to approve the ceasefire agreement.
The war in Gaza has supported oil prices as investors have weighed the potential risk to global oil supply if the war were to develop into a wider regional conflict.
Michael McCarthy, CEO of investor platform Moomoo Australia and New Zealand, said the Gaza ceasefire was unlikely to change oil supply in the Middle East as Opec+ had not hit its increased production targets.
The group, made up of oil cartel Opec and allies, agreed on Sunday to a November output hike that was smaller than market expectations, easing oversupply concern.
McCarthy also said the dollar’s strength against the Japanese yen and euro is generally weighing on commodities. Dollar-denominated oil has become more expensive for investors holding other currencies.
Prices had gained about 1% on Wednesday to reach a one-week high after investors viewed stalled progress on a Ukraine peace deal as sustaining sanctions against Russia.
Meanwhile, total weekly US petroleum products supplied, a proxy for US oil consumption, rose last week to 21.990-million barrels a day (bbl/day), the most since December 2022, showed a report from the Energy Information Administration on Wednesday.
JPMorgan analysts said global oil demand began on a softer note in October as numerous consumption indicators, including container arrivals at the Port of Los Angeles, truck toll mileage in Germany and container throughput in China, pointed to a moderation in activity.
Global oil demand averaged 105.9-million barrels a day in the first seven days of October, expanding by 300,000bbl/day from last year’s level and 90,000bbl/day lower than JPMorgan’s estimates, its analysts said in a client note.
The pace of global crude and products inventory build has also slowed, expanding by 8-million barrels last week, the slowest increase in the past five weeks, they said.
Reuters
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