Oil prices edge lower with Israel-Hamas ceasefire in focus

Investing.com-- Oil prices fell slightly in Asian trade on Tuesday, extending recent losses as reports of some progress towards an Israel-Hamas ceasefire saw traders pricing out a risk premium from crude.

Persistent concerns over weak demand, particularly in top oil importer China, also kept crude prices largely subdued.

Brent oil futures expiring in October fell slightly to $77.61 a barrel, while West Texas Intermediate crude futures edged lower to $73.60 a barrel by 21:45 ET (01:45 GMT). 

Israel accepts ceasefire proposal, Hamas response awaited 

U.S. Secretary of State Antony Blinken said Israel Prime Minister Benjamin Netanyahu had agreed to a preliminary American proposal for a ceasefire in Gaza, media reports said on Monday.

Focus was now on a response from Hamas, although the Palestinian group had recently expressed doubts over a ceasefire, especially as Israel maintained its offensive against Gaza in recent weeks. 

Fears that a prolonged conflict in the Middle East could impact oil prices saw traders keeping a risk premium priced into oil markets, helping Brent prices briefly recover past $80 a barrel. 

But these concerns were diminished by the lack of an Iranian retaliation against Israel over the killing of a Hamas leader in Tehran in July. 

Demand fears, China remains in focus 

In addition to uncertainty over Middle East supplies, oil markets were also quashed by persistent concerns over demand, particularly in top importer China.

China’s central bank kept its benchmark loan prime rate unchanged on Tuesday, after unexpectedly cutting rates in July.

Focus is squarely on signals of more economic support from Beijing, as the government struggles to shore up growth.

China’s oil imports fell for a second consecutive month in July, as soft economic growth weighed on fuel demand in the country. 

But signs of steady U.S. fuel demand helped somewhat offset concerns over a demand slowdown in China, as U.S. inventories shrank for several consecutive weeks. 

Oil markets are also watching for more economic signals from the U.S. this week, with Fed Chair Jerome Powell set to speak at the Jackson Hole Symposium on Friday.