By Adedapo Adesanya
Oil prices fell about 1 per cent to a two-week low on Tuesday as Middle East supply concerns eased after Israel accepted a proposal to tackle disagreements blocking a ceasefire deal in Gaza, and as economic weakness in China weighed on fuel demand.
Brent futures declined by 46 cents or 0.6 per cent to settle at $77.20 a barrel and the US West Texas Intermediate (WTI) crude crumbled by 33 cents or 0.4 per cent to $74.04 per barrel.
US Secretary of State, Mr Antony Blinken, visited Egypt and pushed for progress toward a Gaza ceasefire and hostage release deal.
According to him, major differences still need to be resolved in talks this week.
Meanwhile, Israel retrieved the bodies of six hostages from the Gaza Strip as negotiations continued to bring back more than 100 captives remaining in the besieged Palestinian enclave.
Market analysts noted that despite ongoing ceasefire negotiations, clashes between Israel and Hamas continue, and the markets will remain highly sensitive to any developments in the region.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) have said global oil demand growth must accelerate in the coming months or the market will struggle to absorb the group’s planned increase in supply from October.
OPEC member Saudi Arabia, the world’s biggest oil exporter, said crude exports fell to 6.047 million barrels per day in June from 6.118 million barrels per day in May.
Analysts also noted that if the market fundamentals don’t break this bearish trend soon, OPEC+ may be hesitant to unwind their voluntary cuts anytime soon.
Also, worries continue to emanate from China, the world’s largest oil importer as data showed new home prices fell in July at their fastest pace in nine years. This is as industrial output slowed, export and investment growth dipped and unemployment rose.
There are also worries about fuel demand in the US, the world’s biggest economy, as pressured prices for US heating oil futures fell to their lowest since May 2023 for a second straight day.
Crude oil inventories in the United States rose slightly this week, by 347,000 barrels for the week ending August 16, according to The American Petroleum Institute (API), after analysts predicted a 2.9 million barrel dip.
For the week prior, the API reported a 5.205-million-barrel decrease in crude inventories. So far this year, crude oil inventories are close to where they were at the start of the year, having increased by 760,000 barrels, according to API data.
Official data from the US Energy Information Administration (EIA) will be released later on Wednesday.