Oil Prices Settle Lower

Oil prices settled lower on Monday as ceasefire talks in the Middle East and weaker demand in China weighed on the market.

By 14:30 ET (18:30 GMT), U.S. crude futures were down 2.3% to $73.81 per barrel and Brent crude fell 2.4% to $77.78 per barrel.

Hopes for Gaza Ceasefire Deal Grow

Israeli Prime Minister Benjamin Netanyahu described his meeting with U.S. Secretary of State Antony Blinken as “positive,” increasing hopes for a ceasefire in Gaza. Urgency has heightened due to fears of wider regional escalation, which could impact oil supply.

The discussions come ahead of ceasefire talks expected to resume in Cairo on Wednesday or Thursday. Although Hamas is not directly involved in the talks, they will be briefed by mediators from Qatar and Egypt.

Despite growing ceasefire hopes, tensions remain high following rocket launches by Hezbollah at Israel, according to ANZ Research.

China’s Economy Losing Momentum

Both oil benchmarks fell nearly 2% at the end of last week and continued weakening as data from China indicated a slowdown in the economy, with new home prices experiencing their fastest decline in nine years and rising unemployment.

Complex Crude Landscape

The global oil market faces a complex environment highlighted by supply and demand disparities, geopolitical uncertainties, and changing macroeconomic conditions, according to BofA Securities analysts.

Analysts anticipate a significant slowdown in oil demand growth due to increasing electric vehicle (EV) penetration, projecting growth at an average of 1 million barrels per day (b/d) in 2024 and 1.1 million b/d in 2025. Non-OPEC+ oil production is also expected to rise sharply, by approximately 1 million b/d in 2024 and 1.6 million b/d in 2025, while OPEC+ may reintroduce some barrels to the market in Q4 2024.

(Peter Nurse contributed to this story.)