Brent crude traded below $78 a barrel after losing 2.5% on Monday, while West Texas Intermediate was nearing $74. Secretary of State Antony Blinken said the next step was for Hamas to accept the proposal aimed at de-escalating the 10-month conflict in the Middle East, a major oil-producing region.
Meanwhile, on the demand side, China’s economic malaise remains a primary concern for traders after recent data showed a contraction in factory activity and declining oil demand. The country is the world’s largest importer.
Crude has given up most of its year-to-date gains as the boost from OPEC+ supply curbs and expectations for lower U.S. interest rates have been offset by a tough outlook in China. The Organization of the Petroleum Exporting Countries has said it may ease output curbs in the final quarter of the year, though that plan could change if market conditions change.
Options markets are giving signals that the market now anticipates less risk of crude oil futures rising. Brent options have returned to their usual bias towards put options (which benefit from lower prices) for the first time in about two weeks.
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