OIL FUTURES: Crude prices retreat on prospects of Israel hearing out US concerns

Crude oil futures were lower in mid-afternoon Asian trade April 29, as hopes of a ceasefire in Gaza were raised after John Kirby, White House National Security spokesperson, said in an ABC interview April 28 that Israel agreed to listen to US perspectives and concerns before going into Rafah.

At 3:07 pm Singapore time (0707 GMT), the ICE June Brent futures contract was down $1.06/b (1.18%) from the previous close at $88.44/b, while the NYMEX June light sweet crude contract fell 82 cents/b (0.98%) to $83.03/b.

"US crude begins the week with a minor slide with hope that Antony Blinken's efforts to convince Israel to cease fire in Gaza could pay off, as White House announced Sunday that Israel has agreed to hear out its concerns," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Analysts also pointed to waning hopes the US Federal Reserve might reduce interest rates, as US inflation data was higher than expected -- another key reason for the dip in oil prices.

"The barrel of US crude could see support near the $82/b as besides the tense geopolitical landscape in the Middle East, the reflation trade -- which relies on softer central bank policies and narrow supply due to OPEC's efforts -- remains favourable for an extension of the rally. Yet, a hawkish Fed message this week is a downside risk to this positive outlook, especially if the US finally convinces Israel to cease fire in Gaza," added Ozkardeskaya.

Healthy volumes of crude were heard available, as Abu Dhabi National Oil Co. said its July 2024 availability of exports was at 1.65 million b/d, up from the forecast of 1.631 million b/d in June.

ADNOC already raised the forecast for its flagship Murban crude available for exports from June onward in its last report, by 20,000 b/d (1.24%) for the month. Exports are set to rise to 1.65 million b/d in July, peaking at 1.658 million b/d in October.

Produced from 2,000 onshore wells, Murban is ADNOC's largest crude by volume, accounting for about 2 million b/d from its total production capacity of around 4 million b/d.

Crude oil supply risks still abounded, as news that oil tanker the Andromeda Star did sustain minor damage after its experience in the Red Sea on April 26, where Iran-backed Houthis in Yemen fired three anti-ship ballistic missiles.

The Persian Gulf and Red Sea regions have a share of close to 40% in global oil exports, with more than 20 million barrels -- equivalent to 10 VLCCs of oil and refined products -- and over 10 Bcf of LNG moving daily through the Strait of Hormuz alone, according to shipping industry estimates.

Since the Houthis started attacking Sea shipping in November in support of Palestinians, commercial Red Sea shipping transits have more than halved, with many ships using the longer route via the Cape of Good Hope.