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Expectations that a ceasefire agreement between Israel and Hamas
could be in sight have grown following a renewed push led by
Egypt, even as Israeli Prime Minister Benjamin Netanyahu has
vowed to go ahead with a long-promised assault on Rafah.
Brent crude futures for July were down $1.48, or 1.7%, to $84.85
a barrel by 0928 GMT, after hitting $84.83 the lowest since
March 15. U.S. West Texas Intermediate crude futures for June
dropped $1.49, or 1.8%, to $80.44, their lowest since March 22.
"The crude market is weighed down by continued hopes for a
ceasefire," said Ole Hansen of Saxo Bank.
"In addition, stubborn U.S. inflation has further reduced rate
cut expectations."
U.S. Federal Reserve officials are concluding their latest
two-day policy meeting on Wednesday and are expected to hold
interest rates steady. A rate cut would act as a boost to
economic growth and fuel demand.
"Continued signs of inflation also raised concerns about demand
for crude oil. This comes ahead of the U.S. driving season,
where demand for gasoline rises strongly," ANZ analysts said in
a report on Wednesday.
Further weighing on prices were separate reports that U.S. crude
inventories rose and production increased.
U.S. crude inventories rose 4.906 million barrels in the week
ended April 26, according to market sources citing American
Petroleum Institute figures, which defied expectations for a
decline of 1.1 million barrels.
Traders will be waiting to see if official data from the Energy
Information Administration (EIA) at 1430 GMT confirms the trend.
On Tuesday, the EIA said U.S. production rose to 13.15 million
barrels per day (bpd) in February from 12.58 million bpd in
January, its biggest monthly increase in about 3-1/2 years.
(Reporting by Alex Lawler in London, additional reporting by
Deep Vakil in Bengaluru, Laila Kearney in New York and Sudarshan
Varadhan in Singapore; editing by Jason Neely)
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