Investing.com -- Oil prices edged slightly lower Tuesday, moving in tight ranges as traders focused on tentative progress towards an Israel-Hamas ceasefire.
At 07:40 ET (11:40 GMT), Brent oil futures fell 0.1% to $77.56 a barrel, while West Texas Intermediate crude futures edged 0.1% lower to $73.56 a barrel.
Israel accepts ceasefire proposal, Hamas response awaited
U.S. Secretary of State Antony Blinken said on Monday that Israel Prime Minister Benjamin Netanyahu had agreed to a preliminary American proposal for a ceasefire in Gaza.
The focus was now on a response from Hamas, although the Palestinian group had recently expressed doubts over a ceasefire, especially as Israel has maintained its offensive against Gaza in recent weeks.
Fears that a prolonged conflict in the Middle East could impact oil prices has seen traders keeping a risk premium priced into oil markets.
But these concerns were diminished by the lack of an Iranian retaliation against Israel over the killing of a Hamas leader in Tehran in July.
Demand fears, China remains in focus
In addition to uncertainty over Middle East supplies, oil markets have also been hit by persistent concerns over demand, particularly in top importer China.
China’s central bank kept its benchmark loan prime rate unchanged on Tuesday, after unexpectedly cutting rates in July.
Focus is squarely on signals of more economic support from Beijing, as the government struggles to shore up growth.
China’s oil imports fell for a second consecutive month in July, as soft economic growth weighed on fuel demand in the country.
"Demand concerns centred around China continue to linger," said analysts at ING, in a note. "Trade and industrial output numbers last week suggested that apparent oil demand continued to trend lower in July. These worries mean that speculators continue to be hesitant about jumping into the market, despite expectations for a deficit environment for the remainder of the year."
API inventories due
Signs of steady U.S. fuel demand have helped somewhat offset concerns over a demand slowdown in China, as U.S. inventories shrank for several consecutive weeks.
The American Petroleum Institute will release its estimate of U.S. crude stockpiles later in the session.
(Ambar Warrick contributed to this article.)