Oil prices were little changed on Monday as Israel-Hamas peace talks in Cairo tempered fears of a wider conflict in the Middle East, while US inflation data dimmed the prospects of interest rate cuts anytime soon.
Brent crude futures for June, which expire on Tuesday, were down by 51 cents, or 0.6 per cent, to $88.99 a barrel by 0950 GMT. The most active July contract fell 27 cents, or 0.3 per cent, to $87.94 a barrel.
US West Texas Intermediate (WTI) futures were down 22 cents, or 0.3 per cent, at $83.63 a barrel.
A Hamas delegation will visit Cairo on Monday for talks aimed at securing a ceasefire, a Hamas official told Reuters on Sunday.
“With little other fresh news, the possible cooling of the Gaza environment sees oil prices slip,” said John Evans of oil broker PVM.
Meanwhile, Israeli air strikes on the southern Gaza city of Rafah on Monday killed at least 20 Palestinians and wounded many others.
Markets were also on watch for the US Federal Reserve’s May 1 monetary policy review.
“The language and forward forecasts will be pored over by all market participants with magnifying glasses,” PVM’s Evans said.
Ahead of that, on Friday US inflation data put a damper on rate cuts in the near future, rising 2.7 per cent in the 12 months through March, above the Fed’s target of 2 per cent. Lower inflation would have increased the likelihood of interest rate cuts, which tend to stimulate economic growth and oil demand.
“The sticky US inflation sparks concerns for ‘higher-for-longer’ interest rates,” leading to a stronger US dollar and putting pressure on commodity prices, independent market analyst Tina Teng said.
A stronger dollar makes oil more expensive for those holding other currencies.
Further weighing on the outlook for oil demand, China’s industrial profit growth slowed down in March, official data showed on Saturday, in the latest sign of weak domestic demand in the world’s second largest economy.
But oil prices could swing higher again if US inventory data and China’s PMI index show improvements this week, Teng said.
