Dialogue between Hamas and Israel It weighs on oil
Today’s decline in oil prices was also determined by the ceasefire talks between Israel and Hamas, which are being held in Cairo. The renewed dialogue between the two factions has eased fears of a widening conflict in the Middle East and inflation data in the United States has clouded the prospect of an imminent cut in interest rates.
“With little other fresh news, the possible cooling of the Gaza environment causes oil prices to slide,” said John Evans of oil broker PVM. Markets are also keeping an eye on the US Federal Reserve’s possible monetary policy review on May 1, which could indicate the next direction on interest rate decisions. “The language and forecasts will be analyzed by all market participants,” says Evans.
Investors are warily pricing in an increased likelihood that the Fed could raise interest rates by a quarter of a percentage point this year and next as inflation and the job market remain resilient. U.S. monthly inflation rose moderately in March, dampening expectations of a rate cut in the near future. Lower inflation would have increased the likelihood of rate cuts, which tend to stimulate economic growth and oil demand.
