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Oil prices drop more than 1% as Middle East tensions ease

Oil prices

Brent crude futures shed $1.48, or 1.6%, to $89.69 a barrel, and U.S. WTI crude was at $85.54 a barrel, down $1.37, or 1.5%

Oil prices slipped more than $1 a barrel on Monday, with Brent dropping below $90, as Middle East tensions eased after Israel partly withdrew from Gaza and committed to fresh talks on a potential ceasefire.

Brent crude futures shed $1.48, or 1.6%, to $89.69 a barrel by 0615 GMT.

U.S. West Texas Intermediate (WTI) crude was at $85.54 a barrel, down $1.37, or 1.5%.

The world’s top oil exporter, Saudi Arabia, raised official selling prices for all crude grades to Asia in May after heavy oil supply tightened.

Fire struck an offshore platform operated by Mexico’s national oil company Pemex on Saturday. This comes after Pemex requested its trading unit to cancel up to 436,000 bpd of crude exports in April.

However, Goldman Sachs analysts expect Brent to stay below $100 a barrel in its base case scenario that assumes already strong demand, no further geopolitical hits to oil supply and that elevated spare capacity will lead OPEC+ to increase production in Q3.

In the US, oil rigs increased by two to 508 last week while gas rigs dropped by two to 110, the lowest since January 2022, Baker Hughes said in its report on Friday.

The U.S. employment report on Friday beat expectations, suggesting the economy closed the first quarter on solid ground and potentially delaying expected Fed rate cuts this year.

The Fed may push out rate reductions amid solid U.S. economic data and a tight labour market.

Investors will be scouring CPI data from U.S. and China due later this week for further hints on the timing of possible Fed interest rate cuts and to gauge the economic health of the world’s top two oil consumers.

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