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Crude oil futures turned lower Monday, with the U.S. WTI benchmark hitting its lowest level in a month, as speculation builds that Israel and Hamas may have made progress toward a deal that would free some Israeli hostages and bring a ceasefire to the war in Gaza.
U.S. Secretary of State Blinken pressured Hamas to accept Israel’s latest proposal, calling it “extraordinarily generous.”
The oil market has seen “some easing of risk premium as the threat of a direct confrontation between Israel and Iran has gone away,” Price Futures Group’s Phil Flynn said, according to Marketwatch, although “the ongoing drama in the continuing risk of supply against what should be record-breaking demand is going to keep the market well supported.”
Front-month Nymex crude (CL1:COM) for June delivery ended -1.4% to $82.63/bbl, its lowest since March 27, and front-month June Brent crude (CO1:COM) closed -1.2% to $88.40/bbl.
Meanwhile, U.S. natural gas climbed above $2, with the June Nymex contract (NG1:COM) finishing +5.5% to $2.03/MMBtu, the front-month’s highest settlement value since February 5.
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Flynn said the oil market also was beginning to price in the anticipated start of partial operations of Canada’s Trans Mountain pipeline expansion project, which will ship an additional 590K bbl/day from Alberta to Canada’s Pacific Coast.
The price of the Canadian oil should rise because Canada will be able to get it out into the marketplace, and there will be more supply in the market, which could put pressure on all grades of crude at least temporarily, Flynn said.
