Blind Faith In Questionable Progress Of Gaza Ceasefire Talks Causes Oil To Dip

Some analysts think traders are wrongly assuming that peace is a fait accompli: File Image/Pixabay

Oil trading patterns on Tuesday was a duplicate of the previous session, with traders taking solace in the perception that a ceasefire in Gaza is forthcoming.

As of 1546 GMT, Brent fell 27 cents to $77.39 per barrel, and West Texas Intermediate dipped 21 cents to $74.16 per barrel.

WTI prices have fallen 9.3 percent so far this quarter, while Brent is down 10.5 percent.

U.S. Secretary of State Antony Blinken's latest initiative was to visit Egypt and push for progress toward a Gaza ceasefire and hostage release deal, and some sources hoped that an announcement would come soon pending Hamas's acceptance of a so-called 'bridging' deal – even though hostilities between Israel and Hamas showed no sign of abating.

Plus, Arab mediators told The Wall Street Journal that Hamas leader Yahya Sinwar views the latest round of cease-fire talks as a bluff to give Israel additional time to wage war in Gaza.

Svetlana Tretyakova, senior analyst at Rystad Energy, said, "Despite ongoing ceasefire negotiations, clashes between Israel and Hamas continue, and the markets will remain highly sensitive to any developments in the region."

Amena Bakr, senior research at Energy Intel, added  https://www.cnbc.com/2024/08/20/crude-oil-prices-today.html  "The market is really to some extent wrongly assuming that this geopolitical risk is gone."

Bloomberg noted that crude's recent bearish momentum "has trickled into various aspects of paper markets, with options signalling traders are now anticipating a lower risk of futures spiking….Brent option skews have returned to their usual bias toward puts — which profit from lower prices — for the first time in two weeks."

In other oil news, John Kilduff, founding partner at Again Capital, said that persistent soft economic data from China has been undermining any kind of price strength in oil markets; however, ANZ analysts said the prospect of weak demand in that country is offsetting any gains from risks to supply.

For the record, government data showed that crude demand in China fell 8 percent year-on-year in July, and industrial activity remains subdued.