Oil prices fell on Wednesday over growing hopes for a cease-fire agreement between Israel and Hamas and rising crude inventories in the US, the world’s biggest oil consumer, Anadolu Agency reported.
International benchmark Brent crude traded at $85.28 per barrel at 10.45 a.m. local time (0745GMT), down 1.22% from the closing price of $86.33 per barrel in the previous trading session. At the time of print, Brent was at $84.27 while WTI traded at $79.72 per barrel.
American benchmark West Texas Intermediate (WTI) traded at $80.83 per barrel at the same time, a 1.34% fall from the previous session, which closed at $81.93 per barrel.
Global calls for a cease-fire have been growing as the war in the Gaza Strip has entered its seventh month.
US Secretary of State Antony Blinken is currently on a regional tour as he seeks to advance the cease-fire proposal.
The US has said the proposal would include a six week cease-fire when an initial batch of hostages that remain in Hamas captivity would be released, and humanitarian aid deliveries to the coastal enclave would ramp up.
Hamas is expected to deliver its response to the truce proposal later this week.
The potential for a cease-fire deal is easing concerns of an escalation of the conflict and possible disruptions to supply.
But on Tuesday, Israeli Prime Minister Benjamin Netanyahu vowed to invade Rafah in the southern Gaza Strip despite reports of a possible deal.
The White House said that it continues to oppose an Israeli invasion of Rafah, home to more than 1.4 million displaced Palestinians.
Crude oil inventories and interest rates
American Petroleum Institute (API) data released late Tuesday showing an increase of 4.9 million barrels in US crude oil inventories, against the market expectation of a draw of 1.5 million barrels, signaled bearish demand and drove prices down.
The US Federal Reserve also kept interest rate unchanged Wednesday.
After a series of interest rate hikes from March 2022 to mid-2023 from 0.25% to 5.5%, the bank has been keeping the rate constant since September 2023.
Generally, high interest rates boost the US dollar to strengthen making oil more expensive for holders of other currencies and reducing investors’ appetite for oil demand.
Experts believe that keeping interest rates at high levels for a longer period of time may pose some risks to the oil demand outlook.