Oil prices tumble on report Hamas has accepted ceasefire proposal

May 07, 2024 03:32 AM AEST | By Investing

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Oil prices tumble on report Hamas has accepted ceasefire proposal

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Investing.com -- Oil prices fell in Monday afternoon trading on reports that Hamas approved a cease-fire proposal aimed at ending the conflict in Gaza.

The development followed intensified negotiations over the weekend, which involved U.S. CIA Director William Burns, as well as mediators from Egypt and Qatar.

Brent oil futures expiring in July pared gains after being up more than 1% on the day. At 17:29, brent oil futures were seen exchanging hands at 83.10, up 0.19% on the day, after trading as high as 83.83.

The discussions were prompted by the escalating situation and Israel's threats to carry out an invasion of Rafah, the southernmost city in Gaza.

The press statement released by Hamas did not detail the terms of the cease-fire but indicated that the group had communicated its consent to Egyptian and Qatari negotiators.

The proposal seeks to bring a halt to the hostilities that have been unfolding in the region. As of yet, Israel has not publicly responded to the cease-fire proposal.

The sharp losses from the prior week were fueled in part by the prospect of worsening demand, especially as the U.S. economy appeared to be slowing and interest rates were seen remaining higher for longer to combat stubborn inflationary pressures.

Softer-than-expected nonfarm payrolls data on Friday added to these fears of weakening demand. Mitigating these losses, however, were renewed bets on a September rate cut by the Federal Reserve, which sparked heavy losses in the U.S. dollar. The decline in the greenback offered some relief to dollar-denominated crude prices.

Expectations of unrest in the Middle East, and possible disruptions to crude supplies out of the region, subsequently remained a key source of support for oil prices.

Meanwhile, Saudi Arabia announced that it would raise the official selling price for its crude to Northwest Europe, the Mediterranean and Asia in June, in a sign that one of the world's largest oil-producing nations expects to see resilient demand during the summer.

Ambar Warrick, Scott Kanowsky contributed to this report.

This article first appeared in Investing.com

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