Oil retreats amid fresh international calls for Middle East truce

US West Texas Intermediate crude closed down 48 cents, or 0.6%, at $86.43, while Brent crude futures down 79 cents, or 0.9%, to settle at $90.38 a barrel. For Brent, it was the first drop in five sessions, and for WTI, it was the first in seven.

A Hamas spokesman said that despite the opening of new rounds of talks between Israel and Hamas, there was still no progress in the ceasefire negotiations. During the session, both indexes fell more than $2 as investors focused on Israel’s plan to remove further troops from southern Gaza.

Monday saw a multi-session surge in crude oil prices as a result of Israel reducing its troops in southern Gaza and starting new ceasefire negotiations with Hamas.

The geopolitical risk premium has been somewhat mitigated by Israel’s decision. The anticipation that US crude oil stocks would probably rise last week was another factor impacting oil prices. According to Andrew Lipow, head of Lipow Oil Associates, crude oil benchmarks recovered from session lows following Israeli Prime Minister Benjamin Netanyahu’s announcement that a date would be established for an assault of Rafah, suggesting that the crisis is far from over.

The uncertainty surrounding Iran’s response to last week’s bombing of its consulate in Syria has also limited the drop in oil prices. Tehran has threatened retaliation, fueling fears that the situation in the Middle East would get worse. Benchmarks for crude increased by 4% last week, with Brent futures seeing their greatest run since August of last year as they rose for a record four weeks in a row.

A US employment data released on Friday indicated that the economy concluded the first quarter on strong footing, which may lead the Federal Reserve to postpone interest rate reductions, among other variables influencing the forecast for oil demand.

Later this week, investors will be combing through US and Chinese consumer price index data for more hints about the state of the economies of the two biggest oil-consuming nations in the world.