(MENAFN) Oil prices experienced a decline during early Asian trading on Monday, reversing gains achieved in the previous session, as prospects of peace talks between Israel and Hamas in Cairo alleviated concerns about escalating tensions in the Middle East. The easing of geopolitical tensions was further reinforced by US inflation data, which tempered expectations of an imminent interest rate reduction.
In specific figures, Brent crude futures dropped by USD1, or 1.1 percent, to USD88.50 a barrel initially, before slightly rebounding to USD88.55 by 0149 GMT. Similarly, West Texas Intermediate crude futures witnessed a decline of 84 cents, or 1 percent, settling at USD83.01 per barrel.
Analysts attributed the subdued market opening on Monday to the increased mediation efforts aimed at brokering a ceasefire agreement between Israel and Hamas. The prospect of a Hamas delegation participating in peace talks in Cairo added to the sentiment of easing geopolitical tensions. Notably, a Hamas official confirmed plans for the movement's delegation to engage in negotiations in Cairo.
Additionally, the White House revealed that Israel had agreed to consider American concerns regarding the potential humanitarian impacts of a potential invasion of the city of Rafah. These developments contributed to a more optimistic outlook regarding the situation in the region, exerting downward pressure on oil prices.
Meanwhile, market attention remains focused on the upcoming monetary policy review by the Federal Reserve, scheduled for May 1. Recent data indicating a 2.7 percent increase in US inflation over the twelve months leading up to March, surpassing the central bank's target of 2 percent, has prompted speculation about the possibility of interest rate adjustments. Lowering interest rates could stimulate economic growth and subsequently drive up demand for oil, as observed by analysts amidst the current market dynamics.
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