Oil prices fell on Tuesday April 30, as investors scrutinized the situation in the Middle East, while the hope of a truce in Gaza attenuated the risk premium and a new oil pipeline opened in Canada. The price of a barrel of Brent from the North Sea for delivery in June, which is the last day of trading, lost 0.61% to 87.86 dollars. Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month, lost 0.84% to $81.93.
The prices of the two global crude oil benchmarks have lost ground, “due to easing geopolitical risks in the Middle East, the United States is intensifying its efforts to achieve a truce in Gaza”, said DNB analysts. Israel will wait “until Wednesday evening” a response from Hamas to the truce offer under discussion in Cairo, before making a decision on sending a delegation there, an Israeli official told AFP.
This truce of several weeks in the Gaza Strip would be associated with the release of Israeli hostages, at the end of discussions which offer a glimmer of hope after almost seven months of war. The head of American diplomacy, Antony Blinken, urged Palestinian Hamas to accept “without delay” the new truce proposal with Israel, where Prime Minister Benjamin Netanyahu once again promised a ground offensive in Rafah “with or without” truce.
A new oil pipeline in Canada
The announcement “of the upcoming commissioning of a major Canadian oil pipeline” also weighed on prices because it could improve supply, noted Phil Flynn of Price Futures Group. The new Trans Mountain pipeline, which connects central Canada to the West Coast, officially begins service on Wednesday. It is the first major pipeline in decades to be built in Canada, the world’s fourth-largest crude oil exporter.
Finally, investors were also awaiting the decision of the American Federal Reserve (Fed) on Wednesday following the meeting of its Monetary Policy Committee, noted DNB analysts. “The persistence of high rates could strengthen the appeal of safe haven values, including the dollar”, and weigh on more volatile assets like oil, explained Tamas Varga, analyst at PVM Energy. Conversely, a more accommodating speech from the Fed could encourage oil purchases.
