Oil prices fell in early Asian transactions on Monday, giving up gains made on Friday, as peace talks between Israel and Hamas in Cairo eased fears of a widening conflict in the Middle East.
US inflation data also reduced expectations that interest rates would be cut soon.
Brent crude futures fell by $1, or 1.1%, to $88.50 per barrel before rising to $88.55 by 01:49 GMT. West Texas Intermediate crude futures fell 84 cents, or 1%, to $83.01 per barrel.
Tony Sycamore, an analyst at IG Market, said that the intensification of mediation efforts in a truce agreement between Israel and Hamas eased geopolitical tensions and contributed to the weak opening of the markets on Monday. A Hamas official told Reuters that a delegation from the movement will visit Cairo on Monday to participate in peace talks.
A White House spokesman said that Israel agreed to listen to American concerns regarding the humanitarian repercussions of the possible Israeli invasion of the city of Rafah.
Markets are also awaiting the Federal Reserve’s (US central bank) monetary policy review on May 1.
Data on Friday showed that inflation in the United States increased 2.7% in the 12 months to March, exceeding the central bank’s target of 2%.
Low inflation enhances the possibility of lowering interest rates, which in turn enhances economic growth and demand for oil.
On the other hand, the rise in the dollar enhances expectations that interest rates will remain high for a longer period. The rise of the dollar makes oil more expensive for holders of other currencies.
