Oil prices were largely stable on Tuesday, as investors weighed up signals of a Gaza ceasefire against the reality on the ground in the Middle East, according to Reuters.
Brent crude futures fell 10 cents, or 0.12%, to $82.43 a barrel by 0923 GMT, while U.S. West Texas Intermediate crude futures (WTI) were down 7 cents, or 0.09%, to $77.51 a barrel.
“Concerns around shipping disruptions in the Red Sea have supported a rebound in the price of crude oil overnight, offsetting a more hawkish Fed currently weighing on the demand side of the equation,” said Tony Sycamore, an analyst at IG in Sydney.
The attacks by Iran-aligned Houthis in support of Palestinians in Gaza, where Israel is waging a war against Hamas, have increased freight rates and shipping times, and on Monday, U.S. Central Command said the Houthis had unsuccessfully fired a missile at the U.S. flagged oil tanker Torm Thor in the Gulf of Aden on February 24.
In a sign of de-escalation in the conflict, however, U.S. President Biden said on Tuesday that Israel has agreed to halt military activities in Gaza for the Muslim holy month of Ramadan, as Hamas studied a draft proposal for a truce which includes a pause in fighting and a prisoner-hostage exchange.
Oil prices were also supported by indications of improved demand in the world’s biggest crude consumer China.
“Concerns over Chinese demand are abating, as refineries continue brisk buying in the physical market after a boom in Lunar New Year travel,” analysts from ANZ Bank said in a note.
Also on Tuesday, Russian authorities announced a six-month ban on gasoline exports from March 1 to compensate for rising demand and to allow for planned maintenance of refineries.
Both oil benchmarks had settled more than 1% higher on Monday which followed declines of 2-3% over the previous week as markets factored in a greater likelihood that rate cuts might take longer to come.
U.S. inflation is central to any Fed decision on rate cuts, and January’s U.S. personal consumption expenditures price index, the Fed’s preferred measure of inflation, is due Thursday.
Analysts polled by Reuters on Monday estimated on average that crude inventories rose by about 1.8 million barrels in the week to February 23.
Elsewhere, eyes are on the OPEC+ producer group, with a decision coming in March of whether to extend voluntary production cuts to bolster prices.
“We expect OPEC+ to announce the rollover of voluntary production quotas, at least until the June Ministerial Meeting to provide additional support,” said Helima Croft of RBC Capital Markets in a note late on Monday.