WTI and Brent rise as Netanyahu vows attack on Rafah

U.S. crude oil fell below $82 a barrel on Tuesday as the market was hit by another round of disappointing economic and inflation data.

Traders are increasingly pricing in the risk that the Federal Reserve will raise interest rates again at some point rather than keeping them at the current level, said Phil Flynn, senior market analyst at Price Futures Group.

Consumer confidence fell in April to its lowest level since July 2022. Manufacturing activity in the Chicago area contracted, with the Purchasing Managers’ Index coming in at 37.9, the level the lowest since November 2022. And workers’ compensation costs rose 1.2% in the first quarter. quarter, which was faster than the expected 1%.

“There is a stagflationary environment,” Flynn said. “The market is pricing in the Fed’s fears that it will be much more hawkish.”

Here are today’s energy prices:

• West Texas Intermediate June contract: $81.15 per barrel, down $1.48 or 1.79%. Year to date, U.S. crude oil is up about 13.3%.
• Brent June contract: $87.50 a barrel, down 84 cents, or 0.95%. Year to date, the global benchmark is up about 13.6%.
• RBOB gasoline May contract: $2.75 per gallon, down 0.11%. Since the beginning of the year, gasoline is up about 30%.
• Natural gas June contract: $2.08 per thousand cubic feet, up 2.46%. Since the start of the year, gas is down about 17%.

Higher interest rates for a longer period of time would result in a stronger dollar relative to other currencies, putting pressure on oil prices, said Andy Lipow, president of Lipow Oil Associates.

Oil prices were positive in early trading after Israeli Prime Minister Benjamin Netanyahu dismissed hopes that a proposed hostage deal would prevent an attack on the southern Gaza town of Rafah.

The United States is pushing for a ceasefire to ward off an Israeli offensive against Rafah. Washington fears that an invasion of the city would significantly worsen the humanitarian crisis and regional tensions. But Netanyahu threatened action against Rafah even if a hostage deal was reached.

“The idea that we will stop the war before we achieve all its objectives is out of the question,” Netanyahu said Tuesday at a forum of hostage families. “We will enter Rafah and eliminate the Hamas battalions there – with or without an agreement, in order to achieve total victory.”

Israel has offered the release of 33 hostages held in Gaza in exchange for a ceasefire and the release of Palestinian prisoners. Senior U.S. administration officials and Arab diplomats told NBC News that Israel had indicated for the first time that it would agree to a truce of more than six weeks.

“If this were to happen, the oil market would pose a geopolitical risk, as the likelihood of a supply disruption from the Middle East would decrease,” Lipow said of a potential ceasefire. Oil prices fell more than 1% on Monday on hopes that a deal would ease regional tensions.

A Hamas delegation discussed the proposal with Egyptian officials in Cairo on Monday. Israel is waiting for Hamas’ response before sending its negotiators to Egypt, an Israeli official told NBC News.