Oil Rally Takes Breather With Israel to Remove Some Gaza Troops

The global oil market experienced a pause in its recent rally on May 24, 2021, as Israel announced plans to withdraw some troops from the Gaza Strip. The decision came after an eleven-day conflict between Israel and Hamas militants in the Palestinian territory. The Israeli military stated that the withdrawal was part of an effort to de-escalate tensions and restore calm in the region.

The news of the troop withdrawal led to a slight decrease in oil prices, with Brent crude futures falling by 1.3% to $71.23 per barrel, and West Texas Intermediate (WTI) crude dropping by 1.5% to $68.32 per barrel. The price decline marked the first drop in oil prices since May 19, 2021, when both Brent and WTI recorded gains of 3% and 2.5%, respectively.

The oil market had been on an upward trend due to various factors, including the gradual easing of lockdowns and travel restrictions in many countries due to the ongoing COVID-19 pandemic, as well as production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+.

However, the market was also facing uncertainty due to several upcoming events and reports that could impact supply and demand dynamics. These include the U.S. Energy Information Administration's (EIA) weekly petroleum status report, which is scheduled for release on May 26, 2021. The report is expected to provide insights into U.S. crude oil inventories and production levels.

Additionally, the American Petroleum Institute (API) is set to release its weekly report on inventory levels on May 25, 2021. The API report often serves as an indicator for the EIA report and can influence oil prices before the official EIA data is released.

Furthermore, the OPEC+ Joint Ministerial Monitoring Committee (JMMC) is scheduled to meet on May 26, 2021, to review the group's production levels and compliance with production cuts. Any changes to OPEC+ production policy could impact oil prices significantly.

Given these factors, traders were cautious about making significant moves in the oil market and opted to take a breather following the Israeli troop withdrawal announcement. The market will closely monitor these upcoming events and reports to gauge the impact on supply and demand dynamics and make informed investment decisions accordingly.