Investing.com — Oil prices rose in Asian markets on Monday, continuing a rebound from the previous day’s trading as media reports showed no progress towards a ceasefire between Israel and Hamas and hostilities continued in the region.
Oil markets also rose on optimism about lower U.S. interest rates after Federal Reserve Chairman Jerome Powell’s comments bolstered expectations of a rate cut in September. Oil prices rebounded on Friday after Powell’s comments.
Crude oil for October maturities rose 0.8% to $79.59 a barrel and was up 0.6% to $75.45 a barrel as of 9:01pm ET (1:01am GMT).
Cairo talks fail to achieve Gaza ceasefire
Talks between Hamas and Israel in Cairo failed to reach a ceasefire agreement over the weekend, media reports said, reducing the chances of a de-escalation in the 10-month-old war.
U.S. officials said the talks had been constructive but the failure to reach an agreement undermined earlier optimistic comments from U.S. officials. The talks are still due to continue in the coming days.
Attacks between Hezbollah and Israel over the weekend further complicated prospects for a ceasefire, but both sides said they did not want to escalate tensions.
Amid continuing instability in the Middle East, traders have added a risk premium to crude on concerns that the conflict between Israel and Hamas could spread to destabilize oil production in the oil-rich region.
Interest rate cuts welcome, weak dollar boosts oil prices
Growing optimism about lower U.S. interest rates also supported oil prices, as traders bet the world’s largest economy was headed for a soft landing.
Oil prices fell to a 13-month low, providing a further boon to the oil market, as a weaker dollar makes oil cheaper for overseas buyers.
The Federal Reserve is widely expected to cut interest rates in September, but traders are divided on whether to cut them by 25 or 50 basis points.
Recent U.S. inventory data showed fuel demand in the country remains strong, further strengthening the view that oil demand will remain strong.
However, lingering concerns about an economic slowdown in China, the largest oil importer, kept overall oil price gains in check.
