Oil prices were little changed in early Asian trade on Friday after falling more than 1 per cent in the previous session, as the market’s war risk premium faded after Israel and Hamas agreed to the first phase of a plan to end the war in Gaza.
Brent crude futures were up 9 cents, or 0.1 per cent, at $65.31 a barrel by 0044 GMT. U.S. West Texas Intermediate crude rose 12 cents, or 0.2 per cent, to $61.63.
Israel and the Palestinian militant group Hamas signed a ceasefire agreement on Thursday in the first phase of U.S. President Donald Trump’s initiative to end the war in Gaza.
Under the deal, which Israel’s government ratified on Friday, fighting will cease, Israel will partially withdraw from Gaza, and Hamas will free all remaining hostages it captured in the attack that precipitated the war, in exchange for hundreds of prisoners held by Israel.
Prices had reached a one-week high following gains of around 1 per cent on Wednesday due to the stalled progress on a Ukraine peace deal, a sign that sanctions against the world’s second-largest oil exporter Russia could continue.
On a weekly basis, both benchmarks were still up around 1.2 per cent after falling steeply last week.
The Gaza ceasefire deal was a major step towards ending the two-year war that has raised the risk of oil supply disruptions, Daniel Hynes, an analyst at ANZ, said in a note on Friday.
“This (deal) saw the focus move back to the impending oil surplus, as OPEC proceeds with the unwinding of production cuts,” Hynes said.
A smaller-than-expected November hike in output agreed by the Organization of the Petroleum Exporting Countries and allies (OPEC+) on Sunday eased some of those oversupply concerns.
Investors are also worried that a prolonged U.S. government shutdown could dampen the American economy and hurt oil demand.
