May 1 Reuters Oil prices fell for a third day on Wednesday amid increasing hopes of a ceasefire agreement in the Middle East and on rising crude inventories and production in the U.S., the world39;s biggest oil consumer.

Both oil price benchmarks were down more than 1 at 0650 GMT. Brent crude futures for July were 88 cents lower at 85.45 a barrel, while U.S. West Texas Intermediate crude futures for June were 90 cents lower at 81.03 per barrel.

Expectations that a ceasefire agreement between Israel and Hamas could be in sight, following a renewed push led by Egypt to revive stalled negotiations between the two, pushed oil prices lower.

The potential for a ceasefire agreement between Israel and Hamas has eased concerns of an escalation of the conflict and any possible disruptions to supply, ANZ analysts said in a note on Wednesday.

However, Israeli Prime Minister Benjamin Netanyahu vowed on Tuesday to go ahead with a longpromised assault on the southern Gaza city of Rafah, whatever the response by Hamas to the latest proposals for a halt to the fighting and a return of Israeli hostages.

Also pressuring prices were swelling U.S. crude oil inventories and rising crude supply.

U.S. crude oil inventories rose 4.906 million barrels in the week ended April 26, according to market sources citing American Petroleum Institute figures, which defied expectations for a decline of 1.1 million barrels.

Traders will be waiting to see if official data from the Energy Information…