Oil prices rise with no Gaza ceasefire in sight

Investing.com-- Oil prices rose in Asian trade on Monday, extending a rebound from the prior session as media reports showed no progress towards an Israel-Hamas ceasefire while hostilities in the region persisted.

Oil markets were also buoyed by optimism over lower U.S. interest rates, after comments from Federal Reserve Chair Jerome Powell cemented expectations for a September cut. Oil had rebounded on Friday following Powell’s comments.

Brent oil futures expiring in October rose 0.8% to $79.59 a barrel, while West Texas Intermediate crude futures rose 0.6% to $75.45 a barrel by 21:01 ET (01:01 GMT). 

Gaza ceasefire remains elusive in Cairo talks 

Media reports showed that talks between Hamas and Israel in Cairo yielded no agreement for a ceasefire over the weekend, diminishing any chances of deescalation in the 10-month old war.

U.S. officials said the talks were constructive, although the apparent lack of an agreement undermined earlier, optimistic comments from U.S. officials. Still, talks are set to continue in the coming days.

Strikes between Hezbollah and Israel over the weekend also further complicated the prospect of a ceasefire, although both sides said they did not want an escalation. 

Persistent instability in the Middle East saw traders attach some risk premium to oil, amid bets that a spillover of the Israel-Hamas conflict could destabilize oil production in the crude-rich region. 

Rate cut cheer, weak dollar buoy oil 

Growing optimism over lower U.S. interest rates also supported oil prices, as traders bet that the world’s biggest economy was headed for a soft landing.

The dollar slid to a 13-month low, further benefiting crude markets. A softer dollar makes oil cheaper for international buyers. 

The Federal Reserve is widely expected to cut interest rates in September, although traders are split over a 25 or 50 basis point cut. 

Recent inventory data from the U.S. showed fuel demand in the country remained strong, further spurred bets that oil demand will remain strong.

But persistent concerns over an economic slowdown in top oil importer China limited overall gains in crude.