Oil Prices Slip as Gaza Ceasefire Talks Progress and Tropical Storm Beryl Threatens US Supplies

Oil prices edged lower on Monday, following a four-week upward trend, due to the prospect of a ceasefire in Gaza easing geopolitical tensions. Investors are also monitoring Tropical Storm Beryl, which threatens to disrupt U.S. energy supplies.

Brent crude futures dipped 0.4% to $86.18 a barrel, while U.S. West Texas Intermediate crude declined 0.5% to $82.71 a barrel. The ongoing ceasefire talks, mediated by Qatar and Egypt, aim to resolve the nine-month-old conflict in Gaza.

Meanwhile, several key U.S. ports have closed in preparation for Hurricane Beryl, which is expected to make landfall on the Texas coast. These closures could temporarily halt crude and liquefied natural gas exports, oil shipments to refineries, and motor fuel deliveries, potentially impacting supply and prices.

Despite these concerns, there is optimism that U.S. data will reveal another significant weekly draw in oil inventories due to peak driving season, which could bolster oil prices. WTI already gained 2.1% last week following a report by the Energy Information Administration showing a decline in crude and refined product stockpiles.

Furthermore, the number of operating oil rigs in the U.S. remained steady at its lowest level since December 2021, suggesting limited growth in production.

Hopes of interest rate cuts, fueled by recent U.S. data indicating easing inflation and slowing job growth, also supported oil prices last week. Lower interest rates could stimulate economic activity and increase crude oil demand.

Market participants are also monitoring the potential impact of recent elections in the UK, France, and Iran on geopolitics and energy policies. France faces a potential political deadlock after Sunday’s elections resulted in a hung parliament, while Iran elected a relative moderate, Masoud Pezeshkian, as its new president.

Overall, oil prices are experiencing a slight dip as ceasefire talks progress in Gaza and Tropical Storm Beryl poses a threat to U.S. supplies. However, factors such as expectations of further inventory draws, hopes of interest rate cuts, and geopolitical developments continue to influence the market.