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Ammon News - Oil edged down on Tuesday after Israel-Hamas ceasefire talks in Cairo helped quell market fears of an expanding conflict in the Middle East, while worries about the outlook for U.S. interest rates dragged on the market.

Brent crude futures dipped 19 cents, or 0.21%, to $88.21 a barrel at 0630 GMT, while U.S. West Texas Intermediate crude futures slipped 20 cents, or 0.24%, to $82.43 a barrel.

The front-month contract of both benchmarks lost more than 1% on Monday.

"The ongoing negotiation for a potential ceasefire between Israel and Hamas has led market participants to further unwind the geopolitical risk premium in oil prices, while the upcoming Fed meeting also drives some near-term reservations," said Yeap Jun Rong, market strategist at IG.

"Rates being kept at elevated levels for longer could trigger a further rise in the U.S. dollar, while also putting some risks to oil demand outlook."

On the economic front, investors are on watch this week for the U.S. Federal Reserve's May 1 policy review, with stubborn inflation pushing out market expectations for any rate cuts, which could bolster the U.S. dollar and hamper oil demand.

Some investors are cautiously pricing a higher probability that the Fed could hike interest rates by a quarter percentage point this year and next as inflation and the labor market remain resilient.

Reuters