Oil prices rise as Israel-Hamas ceasefire hopes dim

Oil prices rose in Asian trade on Monday after clocking their worst weekly decline in seven months, amid growing signs that the latest ceasefire talks between Israel and Hamas had yielded little progress.

Further gains in oil were limited by the prospect of weakening demand and less tight supplies this year. The two factors also saw oil prices log steep losses last week.

Brent oil futures expiring in July rose 0.5% to $83.39 a barrel, while West Texas Intermediate crude futures rose 0.5% to $78.18 a barrel by 21:04 ET (01:04 GMT).

Both contracts slid between 6.6% and 7.5% last week, their worst weekly performance since October.

Israel-Hamas ceasefire talks undermined by continued strikes
Media reports said that the latest round of ceasefire talks between Israeli and Hamas delegates had ended in Egypt with no agreement being reached.

This came as Israel launched a devastating strike killing at least 10 in Rafah, which was in apparent retaliation for Hamas missile strikes on the Kerem Shalom crossing- a key channel for aid into Gaza. Israel also closed the crossing after the missile attacks.

The continued conflict showed little signs of de-escalation, keeping expectations of geopolitical unrest in the Middle East squarely in play. This factored into some bets that continued disruptions in the oil-rich region will eventually dent crude supplies.

Oil battered by demand fears, less tight supplies
But oil prices were nursing sharp losses from the prior week on the prospect of worsening demand, especially as the U.S. economy and its peers appeared to be slowing amid sticky inflation and high interest rates.3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .
Softer-than-expected nonfarm payrolls data added to these fears, although the data also spurred some resurgence in bets on a September rate cut by the Federal Reserve. The reading sparked heavy losses in the dollar, offering some relief to crude prices.

But relatively high rates and inflation are expected to weigh on the global economy this year, potentially stymying demand.

On the supply front, recent data showing U.S. crude production rose back to record highs also weighed, as did a bigger-than-expected weekly build in U.S. oil inventories.

Signs of robust U.S. production undermined speculation that the Organization of Petroleum Exporting Countries and allies will maintain its ongoing production cuts past end-June.