Oil slipped as broader market weakness and concerns about a global glut of crude overshadowed escalating tensions in the Middle East.
West Texas Intermediate fell to around $67 a barrel, on track to snap a two-day winning streak. US equities weakened a day ahead of a Federal Reserve decision set to provide clarity on the economic effects of ongoing trade wars. Oil earlier rose as much as 1.7% after Israel conducted military strikes across Gaza, while the US increases pressure on Iran.
“Crude has been pricing in only a minimal geopolitical risk premium as tensions between Israel and Hamas resurface,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “Most traders view the premiums as selling opportunities, positioning for inventory builds later in the year and increasing macroeconomic risks.”
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Crude is on track for a quarterly loss as an escalating global trade war threatens demand while OPEC and its allies are set to raise production starting in April. The global market was already set for a glut, according to the International Energy Agency.
US President Donald Trump began a phone call with Russian President Vladimir Putin on Tuesday to negotiate an end to the war in Ukraine.
Still, some market participants are have been quick to hedge against a pickup in geopolitical risk. Premiums on bearish put options declined relative to bullish calls on Monday, and the day's trading was dominated by a flurry of $100-a-barrel wagers.
Prices:
WTI for April delivery fell 0.9% to $67.00 a barrel as of 12:35 p.m. in New York.
Brent for May settlement slipped 0.6% to $70.65 a barrel.
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