WTI drops to nearly two-week low amid optimism over Gaza ceasefire talks

• WTI remains under some selling pressure amid hopes for a ceasefire in Gaza.
• China’s economic woes contribute to the decline to a nearly two-week low.
• Fed rate cut bets undermine the USD, which could help limit further losses. 

West Texas Intermediate (WTI) US crude Oil prices drift lower for the third straight day on Tuesday – also marking the fifth day of a decline in the previous six – and drop to a nearly two-week low during the Asian session. The commodity currently trades just below mid-$73.00s, down 0.40% for the day, amid hopes of a ceasefire in Gaza.

US Secretary of State Antony Blinken said on Monday that Israeli Prime Minister Benjamin Netanyahu had accepted a bridging proposal to tackle disagreements blocking a ceasefire deal and also urged Hamas to do the same. This helped ease worries about a broader conflict in the Middle East and supply disruptions from the key Oil producing region, which, in turn, is seen weighing on the black liquid. 

Furthermore, an economic slowdown in China – the world's largest importer of Oil – is expected to curb fuel demand and exert additional pressure on the commodity. In fact, Chinese refineries sharply cut crude processing rates last month in response to weak fuel demand. That said, the risk of a further escalation of geopolitical tensions could lend some support to Crude Oil prices and help limit losses. 

Apart from this, the prevalent selling bias surrounding the US Dollar (USD), which dropped to a fresh multi-month low amid bets for an imminent start of the Federal Reserve's (Fed) rate-cutting cycle, should lend some support to the commodity. Traders might also refrain from placing aggressive directional bets ahead of the FOMC minutes on Wednesday and Fed Chair Jerome Powell's speech on Friday.