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The
Israeli military seized control of the Rafah border crossing
between the Gaza Strip and Egypt and its tanks pushed into the
southern Gazan town of Rafah, as mediators struggled to secure a
ceasefire agreement.
Brent crude futures were down 7 cents to $83.26 a barrel at 0950
GMT, while U.S. West Texas Intermediate (WTI) crude futures were
unchanged at $78.48.
"Truce remains elusive, and even if it is reached the question
remains whether Houthi hostilities in the Red Sea would cease
and the Suez Canal would reopen, significantly mitigating the
risk of shipping throughout the region," said Tamas Varga of oil
broker PVM.
"I believe the lack of optimism of the past few days is more the
result of genuine weakness in the physical markets," he added.
In a sign of easing concern that supply could tighten, the
premium of the first-month Brent contract to the six-month
contract slipped to $2.95 a barrel on Monday, the lowest since
mid-February, and was near that level on Tuesday.
On Monday crude settled higher, partly reversing last week's
drop. Brent and WTI had registered their steepest weekly losses
in three months as the market focused on weak U.S. jobs data and
the possible timing of a Federal Reserve interest rate cut.
A stronger dollar capped gains, making crude more expensive for
traders holding other currencies.
As well as Middle East tensions, the latest U.S. inventory
reports will also be in focus.
U.S. crude oil and product stockpiles were expected to have
fallen last week, a Reuters poll showed. Crude inventories could
have fallen by about 1.2 million barrels in the week to May 3,
based on analyst forecasts. [EIA/S]
Saudi Arabia's move to raise official selling prices for its
crude sold to Asia, Northwest Europe and the Mediterranean in
June also supported prices, signaling expectations of strong
demand this summer.
(Reporting by Alex LawlerAdditional reporting by Andrew Hayley
and Jeslyn LerhEditing by David Goodman and Mark Potter)
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