Crude oil slides more than $1 a barrel amid Gaza ceasefire hopes

Brent crude futures fell by 1.8% to $89.57 a barrel as investors focus on Israel’s decision to withdraw more troops from southern Gaza

The decline in oil prices should be modest until it becomes clear how Iran will respond to the bombing of its consulate in Syria last week. 

Crude oil prices fell by over $1 a barrel after Israel reduced its troops in southern Gaza and began a fresh round of ceasefire talks with Hamas.

Brent crude futures fell $1.60, or 1.8%, to $89.57 a barrel, with investors focusing on Israel’s decision to withdraw more soldiers from southern Gaza on Sunday.

“The Sunday Israel announcement (withdrawing its ground forces part of the Gaza strip) has reduced somewhat the geopolitical risk premium,” UBS analyst Giovanni Staunovo said.

A Hamas official said on Monday that the talks with Israel remain deadlocked, although an Israeli minister earlier described the talks as the closest the sides have come to a deal since November. 

Also weighing on oil prices were expectations that US crude oil stocks likely rose last week, Mr Staunovo said.

However, the decline in oil prices should be modest until it becomes clear how Iran will respond to the bombing of its consulate in Syria last week. Tehran has said it will take revenge on Israel for the airstrike which killed two Iranian generals.

Among the factors affecting oil's demand outlook, a US employment report last week suggested the US economy ended the first quarter on solid ground, which could prompt the US Federal Reserve to delay interest rate cuts this year.

Investors will be scouring consumer price index data from the US and China this week for further clues on the timing of possible Fed rate cuts and to gauge the economic health of the world's top two oil consumers.

• Reuters