WTI edges up to $78.50 after Israeli strike on Rafah

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West Texas Intermediate (WTI) crude oil was up slightly and hovering around $78.50 a barrel in Asian trading on Tuesday, following Israel’s strike on Rafah in Gaza.

Meanwhile negotiations for a ceasefire continued without resolving. According to Reuters, Israeli forces targeted Rafah on Gaza’s southern edge through air and ground attacks, which has provided refuge for over 1 million displaced Palestinians.

On Monday, Hamas accepted a ceasefire proposal from mediators, but Israel rejected the terms, stating they did not meet its demands. The prevailing conflict in the Middle East has contributed to concerns about potential disruptions in crude supplies from the region, thereby supporting oil prices.

Based on analyst forecasts, a Reuters poll conducted on Monday indicated that crude oil and product stockpiles in the United States were anticipated to have declined last week. The average expectation was for crude inventories to have decreased by approximately 1.2 million barrels in the week ending May 3.

Amos Hochstein, US President Joe Biden’s energy adviser, said on Monday that the US possesses an ample supply of oil in the Strategic Petroleum Reserve (SPR) to tackle any supply-related worries and is carefully monitoring market conditions to determine its utilization.

Even after Washington’s directive for the largest-ever sale of 180 million barrels from the SPR following Russia’s 2022 invasion of Ukraine, the SPR remains close to 40-year lows.

The Biden administration has halted the repurchase of oil for the reserve recently, as crude has been trading above the targeted price of $79.00 per barrel.

(Source: OANDA)