Oil steadies above $91/bbl after dip on Middle East ceasefire talks

Global oil benchmark Brent steadied above $91 a barrel on Monday, reducing early losses prompted by Israel withdrawing more soldiers from Gaza and committing to fresh talks on a potential ceasefire in the Middle East conflict.

Brent crude futures were down 16 cents, or 0.2%, at $91.01 a barrel by 1335 GMT. U.S. West Texas Intermediate crude was down 9 cents, or about 0.1%, at $86.82. Both benchmarks lost more than $2 earlier in the session.

Oil prices gained about 4% last week on escalating geopolitical tensions.

Israel said on Sunday it had withdrawn more soldiers from southern Gaza. The country has been reducing troop numbers in Gaza since the start of the year to relieve reservists and is under growing pressure from allies to improve the humanitarian situation in Gaza.

Meanwhile, ceasefire talks were revived as Israel and Hamas sent teams to Egypt for talks ahead of the Eid holidays, though a Hamas official on Monday said no progress was made at a new round of talks.

Among the factors affecting oil’s demand outlook, a U.S. employment report on Friday suggested the economy ended the first quarter on solid ground, which could prompt the Federal Reserve to delay interest rate cuts this year. Investors will be scouring consumer price index data from the U.S. and China this week for further clues on the timing of possible Fed rate cuts and to gauge the economic health of the world’s top two oil consumers. The market at present does not have enough about it physically to warrant a charge beyond $90 a barrel to $100, said John Evans at broker PVM.

“But given the tinderbox nature of the current geopolitical crisis arenas of the Middle East and Ukraine/Russia and a keener interest from big money, the downside potential is also limited at present,” he added.