WTI, Brent fall as market waits for Fed minutes

U.S. crude and the global benchmark declined more than 1% on Tuesday as traders took profits after the oil market rallied last week as the Middle East once again appeared on the brink of wider conflict.

“Oil prices took yesterday as day of correction which was inspired by a lack of any further conflict news from the world’s clash points as markets had to settle on what was bothering the macro world,” John Evans, an analyst with oil broker PVM, wrote in a note Wednesday.

The Federal Reserve will release minutes from its January meeting at 2 p.m. ET on Wednesday. The minutes could provide further insight on when the central bank plans to cut interest rates.

The market has pushed back its expectations on when the Fed will cut rates as inflation remains stubborn in the U.S., with first cut now generally expected in June rather than in March or May. Lower interest rates typically stimulate economic growth which fuels crude oil demand.

Tensions continued to simmer in the Middle East this week after Israel launched airstrikes against Hezbollah in Lebanon, Houthi militants struck another cargo vessel Monday, and as Iran now blames Israel for explosions that hit a natural gas pipeline in the Islamic Republic on Feb. 14.

White House Middle East envoy Brett McGurk is heading to Cairo Wednesday to continue talks on a temporary Gaza ceasefire in exchange for Hamas releasing hostages. The Biden administration wants a ceasefire in place before the start of Ramadan, which begins March 10 after sunset.

The U.S. has warned Israel against a ground invasion of the southern Gaza city of Rafah without a credible plan in place to protect civilians there. Israeli war cabinet member Benny Gantz vowed Sunday that Israel will push into Rafah if Hamas does not release the remaining hostages by Ramadan.