Oil futures saw a slight decrease in early trading on Tuesday as investors analyzed the potential for a cease-fire between Israel and Hamas and evaluated the demand for crude from China.
Price Movements
- West Texas Intermediate crude for April delivery fell 15 cents, or 0.2%, to $77.43 a barrel on the New York Mercantile Exchange.
- May Brent crude, the global benchmark, was down 24 cents, or 0.3%, at $81.43 a barrel on ICE Futures Europe. Front-month April Brent was also lower by 27 cents, or 0.3%, at $82.26 a barrel.
Key Market Drivers
President Joe Biden expressed his hopes for a cease-fire between Israel and Hamas by early next week, aiming to pause hostilities and facilitate the release of remaining hostages.
While the flow of crude from the Middle East remains uninterrupted, concerns about a broader conflict have lent some support to oil prices and led to intermittent volatility.
Reports indicate that Russian Prime Minister Mikhail Mishustin has approved a six-month ban on gasoline exports starting March 1. This measure is likely a response to refinery outages in Russia, as mentioned by Barbara Lambrecht, commodity strategist at Commerzbank.
Despite the ban, Lambrecht pointed out that Russian gasoline exports are currently minimal, so its impact on the global supply is expected to be limited. Additionally, European imports of Russian petroleum products have been under sanctions for approximately a year, with a few exceptions.
On another front, there are indications that China has been ramping up its purchases of crude cargoes since mid-February and increasing its term supplies from Saudi Arabia in March. Analysts Ewa Manthey and Warren Patterson from ING suggest that this surge in purchases could be linked to advance buying ahead of maintenance work that typically leads to reduced imports by refiners.