Oil futures: Brent tumbles on Israel-Hamas ceasefire reports
Quantum Commodity Intelligence – Crude oil futures slumped sharply in a late Thursday trading on reports that Israel was close to reaching a deal with Hamas, which would include a suspension of hostilities and an unspecified number of hostages freed.
Front-month Apr24 ICE Brent futures were trading at $79.19/b (1945 GMT) compared to Wednesday's settle of $80.55/b, while at the start of the week the Mar24 contract traded close to the $85/b mark.
At the same time, Mar24 NYMEX WTI was trading at $74.36/b versus Wednesday's settle of $75.85/b.
Qatar's Foreign Ministry announced that Hamas had given its initial approval to a proposed temporary ceasefire, adding that Israel had also agreed to the proposal, confirming reports that Jerusalem greenlighted the deal during talks in Paris earlier this week.
The Times of Israel reported that the government's War Cabinet was meeting late Thursday to discuss the proposals.
Both Brent and WTI tumbled by around $2.50/b within a few minutes of the announcement, with Brent registering a low of $78.67/b before rebounding slightly.
Prices had already been under pressure since midweek with a refocus on China the main bearish driver amid concerns that various stimulus efforts from Beijing have done little to lift the gloom, particularly in manufacturing, while an indebted property sector also continues to weigh on the broader economy.
But the volatile situation in the Middle East was continuing to raise supply concerns, although so far this has been limited to shipping disruptions in the form of longer journey times via the Cape of Good Hope.
The latest incident came as a US naval vessel intercepted a missile fired by Houthi militants towards the Gulf of Aden on Wednesday evening, along with what the US said were three Iranian drones.
Prices also wobbled on Wednesday after EIA data showed US commercial crude inventories increased 1.2 million barrels to 421.9 million, its first weekly rise since the start of the year.
However, this was partly mitigated by a fall at the Cushing hub, the delivery point for NYMEX WTI, which dropped by 2 million barrels for a third straight week to just above 28 million barrels.
OPEC
The latest Reuters survey, meanwhile, showed OPEC output registered a drop of over 400,000 bpd in January, the largest since last July as the latest round of cuts kicked in, while Reuters excluded Angola production after the West African nation quit the group following the last meeting over a row on quotas.
Russian Deputy Prime Minister Alexander Novak said in a state TV interview Thursday that OPEC+ member-countries are ready for new measures on the oil market if needed.
"We agree that we will continue closely monitoring of performance of commitments taken by countries within the OPEC+ framework. The market situation was discussed; we agree to keep an eye on it," Novak said.
"The situation is stable at present; we will continue monitoring, making if required additional decision to stabilize the market if there is such need."
As expected, the US Federal Reserve kept interest rates unchanged at its January meeting, and Fed Chairman Jerome Powell said that while rate cuts would likely begin at some point this year, he stopped short of endorsing a first cut in March.
This left analysts divided over the pace of rate cuts, but an early reduction cannot be ruled out.
"A rate cut in March is not out of the question, but it would likely take another small increase in core PCE prices in January, in conjunction with soft data on economic activity, to compel the Committee to move in March," said Wells Fargo in its latest investor note.
Danske Bank was more optimistic in its research note, maintaining its forecast on the first rate cut early this year: "We stick to our call for a first cut in March followed by gradual quarterly reductions thereafter, as we think the approach still fits well with the Fed's risk management stance. Market prices in around 35% probability for the March cut."
