In the commodities market, oil prices fell slightly in early trade today, influenced by progress in ceasefire talks between Israel and Hamas and concerns about the direction of US monetary policy. Brent crude was down 5 cents at $88.35 a barrel, while U.S. West Texas Intermediate crude futures were down 12 cents at $82.51 a barrel.
The smaller decline comes on the back of a bigger loss than on Monday, when US West Texas Intermediate crude contracts fell more than 1%. Ongoing discussions in Cairo, where Hamas negotiators hold talks with their leadership after cease-fire talks, have somewhat eased fears of an escalation of conflict that could disrupt oil supplies in the Middle East.
Despite ceasefire talks, violence continued in the area on Monday, with Israeli airstrikes killing scores of Palestinians, particularly in the town of Rafah in the southern Gaza Strip. International leaders urged Israel to refrain from ground invasion.
Maritime security also remains a concern, as Yemen's Houthi rebels continue to target maritime traffic in the Red Sea and Indian Ocean, including two US destroyers and merchant vessels. The incidents, described by Houthi military spokesman Yahya Sari, maintain essential support for oil prices due to potential risks to supply lines.
Investors are also keeping a close eye on the upcoming US Federal Reserve policy review scheduled for May 1. Steady inflation has shifted expectations away from possible interest rate cuts, which would strengthen the US dollar and negatively impact oil demand. Some market participants believe the Federal Reserve is more likely to raise interest rates this year and next year, given inflation and labor market flexibility.
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