Oil prices fell on Thursday as traders kept a close watch on the ongoing negotiations for a cease-fire in the Israel-Hamas conflict. The West Texas Intermediate contract for March dropped 2.68% to settle at $73.82 a barrel, while the Brent contract for April fell 2.30% to settle at $78.70 a barrel.

The market had initially seen a rise of over 1% earlier in the session as it processed the outcomes of an OPEC committee meeting and the Federal Reserve’s decision on interest rates. The OPEC committee confirmed that its members were adhering to production cuts, proposing no change to the decision to slash 2.2 million barrels per day from the market this quarter after reviewing data from November and December of 2023.

Meanwhile, the Federal Reserve held benchmark interest rates steady and hinted that rates had likely reached their peak. This news typically boosts economic growth, which in turn supports oil demand. However, Chairman Jerome Powell indicated that rate cuts are unlikely to occur in March.

John Evans from oil broker PVM noted that the market did not receive the expected boost from Jerome Powell’s post-FOMC unchanged rate decision. However, Powell’s language suggests that interest rate relief could be on the horizon later in the year.

Oil prices experienced their first monthly gain since September in January, driven by stronger than expected economic growth in the U.S., disruptions to U.S. output due to winter storms, and stimulus in China. Additionally, tensions between the U.S. and Iran escalated in the Middle East following a drone strike by militants allied with Tehran that resulted in the death of three U.S. troops in Jordan over the past weekend.

Concerns about China’s economy have also had a lingering impact on the market, with JPMorgan analysts noting that the recent oil price movements have been influenced by the ongoing developments in the Middle East and the broader global economic landscape.