Oil Prices Soften on Potential Gaza Truce and Dollar's Firm

Oil prices experienced a decline on Friday, driven by the prospect of a potential ceasefire in Gaza, which could alleviate geopolitical tensions in the Middle East. Additionally, a stronger U.S. dollar and weakening demand for gasoline in the United States contributed to the downward pressure on prices.

Brent crude futures dropped by 42 cents, equivalent to 0.5%, settling at $85.36 per barrel by 0203 GMT. Similarly, U.S. crude futures fell by 40 cents, or 0.5%, reaching $80.67 per barrel.

Both oil contracts are expected to conclude the week with minimal changes after experiencing over a 3% increase in the previous week. The decrease in oil prices was attributed to reports of a potential U.N. draft resolution calling for a ceasefire in Gaza, along with profit-taking activities, as highlighted by IG analyst Tony Sycamore.

U.S. Secretary of State Antony Blinken expressed optimism on Thursday about the ongoing talks in Qatar potentially leading to a ceasefire agreement between Israel and Hamas. His remarks contributed to easing geopolitical concerns in the region.

In the United States, the world’s leading oil consumer, gasoline product supplied decreased below 9 million barrels for the first time in three weeks, indicating a potential slowdown in crude oil demand. However, consultancy FGE suggested that preliminary weekly data for the first half of March showed a significant decline in crude and main product stocks at major oil hubs globally, which could have a bullish effect on oil prices.

Furthermore, the U.S. dollar strengthened following the Swiss National Bank’s unexpected interest rate cut, which boosted global risk sentiment. A stronger dollar typically makes oil more expensive for investors holding other currencies, thereby reducing demand.