Oil falls 1% on higher US crude output, Israel-Hamas ceasefire talks; Brent dips to $87/bbl
₹6,833 per barrel on the multi commodity exchange (MCX). -US crude production rose to 13.15 million barrels per day (bpd) in February from 12.58 million bpd in January in its biggest monthly increase since October 2021, the Energy Information Administration said. Meanwhile, exports climbed to 4.66 million bpd from 4.05 million bpd in the same period.
-Expectations that a ceasefire agreement between Israel and Hamas could be in sight have grown in recent days following a renewed push led by Egypt to revive stalled negotiations between the two. Traders believe some of the geopolitical risk is being taken out of the market, according to commodity market experts. -Continued attacks by Yemen's Houthis on maritime traffic south of the Suez Canal - an important trading route - have provided a floor for oil prices and could prompt higher risk premiums if the market expects crude supply disruptions.
-Investors also await the two-day monetary policy meeting outcome by the US Federal Reserve Open Market Committee (FOMC), which is due on May 1. According to the CME's FedWatch Tool, it is a virtual certainty that the FOMC leaves rates unchanged at the conclusion of the meeting on Wednesday. -The upcoming us Fed meeting also drives some near-term reservations, according to market experts.
A longer period of elevated interest rates could trigger a further rise in the dollar while also threatening oil demand outlook. -Some investors are cautiously pricing in a higher probability that the US central bank could raise interest rates by a quarter of a percentage point this year and next as inflation and the labour market remain resilient. -Concerns over demand have also weighed on sentiment as diesel prices weakened.
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