Oil futures: Crude prices slide 2% as ceasefire talks enter second day

Quantum Commodity Intelligence – Crude oil futures Friday were sliding lower, largely wiping out otherwise slim weekly gains after benchmarks had initially recovered from the early-month financial upheaval. 

Front-month Oct24 ICE Brent futures were trading at $79.70/b (1730 GMT), compared to Thursday's settle of $81.04/b.

At the same time Sep24 NYMEX WTI was trading at $76.68/b, versus Thursday's settle of $78.16/b, while the more liquid Oct24 contract was trading $75.58/b.    

Focus this week shifted back to the ongoing threat of war in the Middle East spilling over and disrupting oil flows, as investors initially priced in a response from Iran against Israel for attacks that killed senior Hezbollah and Hamas figures.

However, last-ditch diplomacy talks have so far stalled any further escalation in the conflict as international mediators held a fresh round of talks in Doha on Thursday, sparking hopes that a deal will defuse the threat of a wider regional conflict.

Prices also eased after the Washington Post reported that Qatar had warned Iran after day-one of the talks to refrain from escalation and risk derailing delicate negotiations. 

But analysts have said that the outlook for a negotiated truce remains subdued, while Hamas officials are not even directly involved in the new round of talks.

A US-led international delegation met with Israeli officials which White House National Security spokesperson John Kirby described as a "promising start".

Negotiations were continued Friday but the White House acknowledged significant work lays ahead in finding common ground and a formal agreement.

Indicators

Oil markets found limited support this week from the latest financial indicators in the US, including softer inflation keeping expectations alive for a September rate reduction.

Retail sales also rebounded in July, although analysts noted this could come with an inflationary warning.

But manufacturing activity continued to signal slowdown concerns, negating the more positive indicators from elsewhere in the economy.

Wells Fargo bank described Thursday's regional manufacturing surveys from the New York and Philadelphia as "rather grim", with both in contraction territory.

"The July industrial production report was a disaster, but not an unmitigated one at least," said Wells Fargo in its latest report, noting that Hurricane Beryl had a negative impact.

Last Friday, Oct24 Brent futures closed at $79.66/b, while Sep24 WTI settled at $76.84/b.