Oil futures: Crude prices ease on Gaza ceasefire talks, bounces from lows

Quantum Commodity Intelligence – Crude oil futures started the week lower amid hopes of a de-escalation in the Gaza conflict after Israel and Hamas resumed ceasefire negotiations over the weekend, although prices rebounded from lows amid conflicting reports.

Front-month Jun24 ICE Brent futures were trading at $90.37/b (1810 GMT), compared to Friday's settle of $91.17/b but up from the Monday's early low of $88.78/b. 

At the same time, May24 NYMEX WTI was trading at $86.34/b versus Friday's settle of $86.91/b.

Oil benchmarks eased back from five-month highs after both sides sent delegations for the latest round of talks in Cairo, possibly with a temporary ceasefire in mind to start at some time this week, coinciding with the end of Ramadan.

However, the outcome of the negotiations remains uncertain with initial report that progress had been made refuted by both Hamas and Israel, leading to another day of choppy trading conditions. 

Additionally, the Israel Defence Force said Sunday that it had "concluded its mission" in the Southern Gaza city of Khan Younis and had started withdrawing ground troops, leaving just one division in the Gaza Strip.

However, US National Security Spokesman John Kirby said on Sunday that Israel's decision to withdraw some troops from Southern Gaza does not appear to indicate a shift in military strategy.

"As we understand it, and through their public announcements, it is really just about rest and refit for these troops that have been on the ground for four months, and not necessarily — that we can tell — indicative of some coming new operation," Kirby said in an interview ABC. "The word we're getting is they're tired, they need to be refitted."

Tensions

Tensions had been ratcheted up after Israel launched a drone strike on Iran's consulate in Syria last week, which Iran's President Ebraham Raisi said "will not remain without answer". The CIA also warned Israel that Iran could launch a retaliatory attack, likely via a proxy.

That helped lift Brent nearly 5% last week after analysts said that any escalation in the Middle East conflict could start to directly threaten oil supplies, while further strikes against Russia's oil infrastructure added to the upward moment.

Prices rounded off the firmer tone last week after the US posted strong jobs growth on Friday, with more than 300,000 added in March.

"The continued strength in hiring suggests less urgency for policymakers at the Federal Reserve to lower the target range of the fed funds rate," said Wells Fargo in its latest investor note.

"Recent comments from FOMC members have homed in on the jobs market's underlying momentum as justification to wait and allow for more inflation data."

Meanwhile, China's pre-owned home sales increased in the early part of the year and are now up nearly 25% over two years, according to a real estate research firm report.

However, the crisis-hit property sector has been dealt a fresh blow as major developer Shimao Group was hit with a winding-up petition.