Oil prices were little changed on Thursday (October 9) as investors weighed a ceasefire agreement in Gaza that could ease tensions in the Middle East against stalled peace talks in Ukraine that could extend sanctions on Russia and limit its exports.

Brent crude futures fell 12 cents to $66.13 a barrel at 09:43 GMT. U.S. West Texas Intermediate crude fell 14 cents to $62.41. Egypt's government-affiliated Qahera TV reported that the ceasefire agreement between Israel and Hamas had officially taken effect just after midday in the region (09:00 GMT), when the rivals signed it in the Egyptian resort of Sharm el-Sheikh.

Israeli Prime Minister Benjamin Netanyahu's office said the agreement would only take effect after it was ratified by the Israeli cabinet, which is scheduled to meet on Thursday. Under the agreement, fighting will cease, Israel will withdraw some of its forces from Gaza, and Hamas will release hostages it held in the offensive that triggered the war, in exchange for prisoners held by Israel.

'Broad' IMPLICATIONS FOR OIL MARKETS

"This peace agreement represents a major breakthrough in recent Middle East history – its implications for the oil market could be far-reaching, ranging from a possible reduction in Houthi attacks in the Red Sea to an increased likelihood of a nuclear deal with Iran and, ultimately, the possibility of Iran increasing its exports of crude oil and its products," Rystad Energy chief economist Claudio Galimberti said in a note.

Galimberti also said previous attempts to reach a ceasefire agreement had failed. The war in Gaza has supported oil prices due to the potential risk to global supply if the fighting escalates into a broader regional conflict. Michael McCarthy, CEO of investor platform Moomoo Australia and New Zealand, said the Gaza ceasefire is unlikely to change oil supplies in the Middle East because the OPEC+ producer group has not yet reached its production increase target.

The group, comprising the Organization of the Petroleum Exporting Countries (OPEC) and its allies, agreed on Sunday to a smaller-than-expected production increase in November, easing concerns about a supply glut. Oil prices rose about 1% on Wednesday, reaching a one-week high after investors viewed stalled progress on a Ukraine peace deal as a sign that sanctions against Russia, the world's second-largest oil exporter, would continue for some time.

Meanwhile, total weekly U.S. petroleum product supplies, a proxy for U.S. oil consumption, rose last week to 21.99 million barrels per day, the highest since December 2022, according to a report from the Energy Information Administration (EIA) on Wednesday.

J.P. Morgan analysts said global oil demand began to weaken in October as various consumption indicators, including container arrivals at the Port of Los Angeles, truck miles traveled in Germany, and container throughput in China, pointed to a moderation in activity. Global oil demand averaged 105.9 million barrels per day in the first seven days of October, up 300,000 barrels per day from last year's level, although 90,000 barrels per day lower than J.P. Morgan's forecast, its analysts said. (alg)

Source: Reuters.com