Oil prices up, attention turns to truce talks in Gaza

Oil prices rose in early trading on Tuesday, while traders focused on the visit of US Secretary of State Anthony Blinken to the Middle East to see whether it would contribute to reaching a truce in the Palestinian Gaza Strip.

According to Reuters, Brent crude futures rose 20 cents to reach $78.19 per barrel by 0452 GMT, and US West Texas Intermediate crude futures also rose 20 cents to reach $72.98 per barrel. Both contracts rose nearly 1% on Monday, the first rise in four sessions.

“Indicators of de-escalation in the Middle East crisis are absent and continue to provide some support to faltering oil prices,” said Priyanka Sachdeva, chief market analyst at Philip Nova.

Blinken met with Crown Prince Mohammed bin Salman on Monday. The Palestinians hope that the visit will lead to reaching a truce before the planned Israeli attack on the border city of Rafah, where about half of the population of the Gaza Strip is taking shelter.

The truce offer, which was received by the Palestinian Islamic Resistance Movement (Hamas) last week by Qatari and Egyptian mediators, is awaiting a response from the movement, which says it wants more guarantees that it will put an end to the war that has been going on for four months.

The United States continued its attacks on the Iranian-aligned Yemeni Houthi movement, whose attacks on cargo ships disrupted global oil trade routes.

Concerns about the demand outlook limited price gains.

Analysts said that expectations of higher interest rates continuing for a longer period in the United States and abroad are likely to limit consumption, as are indications that the Chinese economy is still suffering.

On the supply front, market participants are awaiting industry data scheduled to be released later today, Tuesday, regarding US crude inventories. Five analysts polled by Reuters estimated that crude inventories rose on average by about 2.1 million barrels in the week ending February 2.

BMI analysts said in a report to clients that they expect the market to remain broadly balanced over the course of the year and for oil prices to rise 3.4%.