Expectations of a "ceasefire" in oil

Oil fell the most in almost two weeks as talks of a possible ceasefire in the Middle East eroded the risk premium for crude. Brent crude traded above $88 a barrel after closing down 1.2% on Monday, while U.S. crude was trading below $83. The gap between Israel and Hamas over a deal to release hostages has narrowed in recent weeks, according to two people familiar with the talks. Crude is set for a fourth monthly gain after reaching its highest level since October in mid-April following Iran’s attack on Israel. The conflicts in the Middle East and Ukraine, as well as supply cuts by OPEC+, are boosting prices, but uncertainties over U.S. monetary policy and high inventories in commodity markets including diesel are weighing on the demand outlook. U.S. Secretary of State Antony Blinken, on his ongoing visit to the Middle East, urged leaders of the Hamas militant group to reach a swift decision on the terms of Israel’s ceasefire. “We have seen some easing in crude in anticipation of a deal, but prices may now remain in a range until the outcome of the latest ceasefire move is known. I expect crude to slide rapidly towards $80 if there is a deal,” said Vandana Hari, founder of Vanda Insights in Singapore.