Oil Prices Fall to 2-Month Low as War Risk on Gaza Declines

Oil prices fell to their lowest level in two months amid signs that the Israeli war on Gaza is continuing to be contained, bringing concern over interest rates and the slowdown in the global economy to the forefront of attention again.

West Texas Intermediate (WTI) prices fell by 1.6% to about $81 per barrel after the Palestinian resistance movement "Hamas" told mediators, according to Bloomberg, that it would release foreign detainees in the next few days, thus alleviating concerns about the spread of war regionally and threatening the flow of crude in the Middle East.

The price of oil has now deteriorated to below its level before the war on Gaza, reaching the lowest settlement level since last August 28.

Oil prices experienced turmoil throughout the month of October, with prices fluctuating in the roughly $11 range. Oil began October trading with a sharp decline amid fears of prolonged monetary policy austerity, with sales accelerating due to automated algorithmic trading. Then the Israeli war on Gaza sent prices soaring because of the potential for unrest in the region that provides a third of global oil flows.

But as fears of war contagion in the region subsided, economic concerns began to take center stage again, leading to the first monthly decline in Brent and WTI crude prices since last May.

"While Benjamin Netanyahu has so far rejected calls for a ceasefire to facilitate the release of prisoners, the Israeli army is using a gradual strategy aimed at limiting its losses," Bloomberg Added.

Signs of weak demand have emerged in recent days, with manufacturing in China falling back into contraction this month, and BP saying gasoline and diesel markets are oversupplied.

The narrowing of WTI's time spread - that is, the difference between its two closest contracts - indicates that the market is not undersupplied in the near term. The widely watched margin narrowed to 50 cents per barrel in the backorder area, down from about $2 per barrel at the end of September.

West Texas Intermediate crude futures for December delivery fell by 1.6%, settling at $81.02 a barrel in New York.

The prices of these contracts decreased by about 11% during the current month. There was little change in December settlement Brent crude contracts, which expired Tuesday, at $87.41 per barrel.

The most active January contracts fell by 1.5% to $85.02 a barrel.