Quantum Commodity Intelligence – Crude oil futures opened the week slightly lower amid reports of fresh attempts to broker a cease fire between Israel and Hamas.
Front-month Jun24 ICE Brent futures were trading at $88.68/b (0400 GMT), compared to Friday’s settlement of $89.50/b, while the more-liquid Jul24 contract was trading $87.49/b.
At the same time Jun24 NYMEX WTI was trading at $83.16/bversus Friday’s settlement of $83.85/b.
The two sides are reportedly set to discuss a potential deal in the coming days, which would include an exchange of hostages as part of a broader fire cease, while the White House said Sunday that President Joe Biden had spoken with Prime Minister Benjamin Netanyahu to reiterate the US position.
According to the Associated Press, an Israeli delegation is expected in Egypt in the coming days to discuss the latest proposals, while Hamas said it will also send a delegation to Cairo on Monday.
However, Israeli media quoted officials as saying that the IDF is still preparing for a ground operation in the southern city of Rafah, despite facing international pressure over the growing humanitarian crisis.
But prices remain at the higher end of the six-month trading range, although the perceived risk premium has eased following a de-escalation in regional tensions.
OPEC+
Crude prices continued to find some support with OPEC+ seemingly in no hurry to start unwinding cuts, and delegates at the early-June ministerial meeting are unlikely to push for a major ramp up in production.
“Despite diminishing concerns about a potential conflict involving major oil producer Iran and Israel, crude oil continues to maintain its strength relatively well,” said City Index analyst Fawad Razaqzada.
“While there remains some premium built into oil prices due to tensions in the Middle East, the primary driver behind oil’s gains is largely attributed to the OPEC+ supply cuts,” added Razaqzada.
However, some OPEC+ members were said to be expressing concerns over losing market share with OPEC expecting solid demand growth this year, while US exports have moved back above 5 million bpd.
Also weighing on sentiment, weak distillate cracks remain a major drag for refiners, particularly in Asia where output is geared towards diesel production. The 10ppm crack for Singapore diesel in late April was consolidating below $15/b, around half the levels seen in February.
Markets were still digesting last week’s disappointing US GP and inflation data, with analysts divided on the impact for the rate-cut timetable.
