Oil prices rise; Israel/Hamas peace talks, Fed meeting in focus

Investing.com-- Oil prices edged higher Tuesday, rebounding after the prior session's declines with the focus remaining on the ceasefire talks between Israel and Hamas and the latest Federal Reserve meeting.

At 08:50 ET (12:50 GMT), Brent oil futures rose 0.6% to $87.71 a barrel, while West Texas Intermediate crude futures gained 0.7% to $83.23 a barrel.

Israel-Hamas ceasefire talks in focus

Both benchmarks had fallen around 1% on Monday after delegates from Israel and the militant group Hamas met in Cairo for peace talks.

Media reports said that Israel had offered a 40-day ceasefire offer to Hamas in exchange for the return of hostages and displaced families begin allowed back into northern Gaza. It also includes new wording intended to satisfy Hamas’ need for a permanent ceasefire.

The Hamas delegation left Cairo, and will return with a written response to the proposal, reports said.

Peace talks between Israel and Hamas have repeatedly fallen through in recent months, with Hamas stating that it will not accept any proposal short of a permanent ceasefire.

But a ceasefire represents a potential de-escalation in the conflict, which could see traders attach an even lower risk premium to oil.

Fears of disruptions in Middle East supply have been a key booster of oil prices in recent weeks.

Fed meeting, interest rate policy in focus

Oil prices have also been pressured by the prospect of higher-for-longer U.S. interest rates, ahead of a Federal Reserve meeting this week

The central bank is widely expected to keep rates steady. But any signals on future rate cuts will be watched, especially as traders have largely priced out the prospect of early rate cuts in 2024.

Markets fear that higher-for-longer rates will pressure the global economy and in turn dent oil demand this year.

Strength in the dollar also pressured oil prices.

The American Petroleum Institute is scheduled to release its latest estimate of weekly crude inventories later in the session.

G7 agrees to end coal use in power generation

In other news, energy ministers from the Group of Seven major democracies agreed on Tuesday to end the use of coal in power generation "during the first half of (the) 2030s", according to an official communique.

However, in a caveat, the statement included an alternative goal of phasing out coal-fired power plants "in a timeline consistent with keeping a limit of a 1.5°C temperature rise within reach, in line with countries' net-zero pathways".

(Ambar Warrick contributed to this article.)

This article first appeared in Investing.com