Oil steadies as weak physical mkts balance ME tensions

LONDON, May 7 (Reuters): Oil prices steadied on Tuesday as weakness in the physical market and concerns about sticky US inflation countered fears of escalation in the Middle East as Israel stepped up attacks in southern Gaza while a ceasefire deal hung in the balance.
The Israeli military seized control of the Rafah border crossing between the Gaza Strip and Egypt and its tanks pushed into the southern Gazan town of Rafah, as mediators struggled to secure a ceasefire agreement.
Brent crude futures were down 30 cents, or 0.4 per cent, at $83.03 a barrel by 1330 GMT while US West Texas Intermediate (WTI) crude futures fell 25 cents, or 0.3 per cent, to $78.23.
"Truce remains elusive, and even if it is reached the question remains whether Houthi hostilities in the Red Sea would cease and the Suez Canal would reopen, significantly mitigating the risk of shipping throughout the region," said Tamas Varga of oil broker PVM.
"I believe the lack of optimism of the past few days is more the result of genuine weakness in the physical markets."
In a sign of easing concern that supply could tighten, the first-month Brent contract's premium to the six-month contract slipped to $2.85 a barrel for its lowest since mid-February.