Investing.com — Oil Prices Dip

Oil prices gave up gains to trade lower Tuesday, as tentative progress towards an Israel-Hamas ceasefire cooled expectations about supply disruptions in the oil-rich Middle East.

At 14:00 ET (18:00 GMT), Brent oil futures fell 0.6% to $77.21 a barrel, while West Texas Intermediate crude futures fell 0.6% to $73.19 a barrel.

Israel Accepts Ceasefire Proposal, Hamas Wary of Amended Deal

U.S. Secretary of State Antony Blinken stated that Israel’s Prime Minister Benjamin Netanyahu agreed to a preliminary American ceasefire proposal in Gaza. However, Blinken noted that Hamas is “now backing away” from the deal. Hamas rejected this claim, calling it “misleading,” and accused the U.S. of altering the previous ceasefire agreement under new demands from Israel. They expressed their willingness to accept the earlier proposal tabled on July 2.

Hamas stated, “Biden and Blinken’s statements are misleading claims and do not reflect the true position of the movement, which is keen to reach a cessation of aggression. We reaffirm our commitment to what we agreed upon with the mediators on July 2nd.”

Traders have kept a risk premium priced into oil markets amid fears of a prolonged conflict in the Middle East affecting oil prices. However, these concerns were lessened by the lack of Iranian retaliation against Israel linked to the death of a Hamas leader in Tehran in July.

Dollar Weakness Keeps Crude Losses in Check

The dollar fell Tuesday as investors anticipate that Fed Chairman Jerome Powell will announce an imminent slice in interest rates this week. Since oil is priced in dollars, a weaker dollar makes oil more appealing for non-dollar buyers. Powell is expected to speak at the annual Jackson Hole summit starting Friday.

Demand Fears; China Remains in Focus

Along with uncertainties over Middle East oil supplies, demand concerns, particularly from top importer China, have impacted oil markets. China’s central bank maintained its benchmark loan prime rate on Tuesday, following an unexpected rate cut in July.

There are growing expectations for more economic support from Beijing to stimulate growth. China’s oil imports dropped for the second consecutive month in July, attributed to soft economic growth impacting fuel demand.

Analysts at ING noted, “Demand concerns centered around China continue to linger. Trade and industrial output numbers from last week suggested that apparent oil demand trended lower in July. This situation makes speculators hesitant to engage in the market, even with expectations for a deficit environment for the remainder of the year.”

Fresh Weekly U.S. Inventories Due

Signs of stable U.S. fuel demand have somewhat alleviated concerns over declining demand in China, as U.S. inventories have decreased for several weeks. The American Petroleum Institute will release its estimate of U.S. crude stockpiles later in the session, just one day ahead of the official petroleum report, which is expected to show a decrease in weekly crude stocks.

(Ambar Warrick contributed to this article.)