Due to mounting demand concerns in China and growing expectations of a truce in Gaza, oil prices fell by almost 2% on Tuesday, reaching a six-week low. Around 12:13 p.m. EST (1613 GMT), U.S. West Texas Intermediate (WTI) crude dropped $1.49, or 1.9%, to $76.91, while Brent futures slid $1.38, or 1.7%, to $81.02 a barrel.
This moved both crude benchmarks into technically oversold territory for the first time since early June and set them up for their lowest closings since June 7. Additionally, it marked the first time since early June that WTI futures have dropped for four straight days. For the third day in a row, Brent was down.
The past month has seen a surge in the Middle East’s attempts to broker a ceasefire between Israel and the terrorist organization Hamas through a plan presented by U.S. President Joe Biden in May and facilitated by Egypt and Qatar.
Even as fighting raged in the Palestinian enclave, Israeli Prime Minister Benjamin Netanyahu told the relatives of hostages held in Gaza that a solution to guarantee their release could be nigh.
Netanyahu and Biden are scheduled to meet at the White House on Thursday. Oil futures have benefited from the war in Gaza as investors have factored in the possibility of disruptions to the world’s supply of crude oil from the Middle East’s major producing regions.
Following further Houthi attacks on commercial ships, which are backed by Iran, and the first Israeli airstrikes on Yemen in reprisal for Houthi drone and missile attacks on Israel, the United Nations Special Envoy to Yemen, Hans Grundberg, issued a dire warning about the possibility of a catastrophic regional escalation.
During talks in China, Palestinian factions, including rivals Hamas and Fatah, decided to put an end to their differences and establish a temporary national unity administration. Claudio Galimberti, head of global market analysis at Rystad, stated in a note that “a uncertain macroeconomic outlook in China and ceasefire negotiations in the Middle East are exerting downward pressure on oil prices this week.” The U.S. dollar (.DXY), which is strengthening to a nine-day high versus a basket of other currencies, is another factor influencing pricing.
A higher dollar raises the price of oil in other nations, which may cause demand for the fuel to decline.
