Israeli forces take control of vital Rafah crossing
US crude, product inventories expected to fall last week
Saudi Arabia hikes official selling prices in June

LONDON, May 7 Reuters Oil edged up on Tuesday after Israel struck Rafah in Gaza and talks for a ceasefire hung in the balance, maintaining the support that the market has gained from heightened Middle East tensions and risk to supplies.

Palestinian militant group Hamas on Monday agreed to a Gaza ceasefire proposal from mediators, but Israel said the terms did not meet its demands and pressed ahead with strikes in Rafah while planning to continue negotiations on a deal.

Brent crude futures rose 21 cents, or 0.3, to 83.54 a barrel by 0810 GMT while U.S. West Texas Intermediate WTI crude futures were up 1 cent at 78.49.

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.

On Monday crude settled higher, partly reversing last week39;s drop. Both contracts had registered their steepest weekly losses in three months as the market focused on weak U.S. jobs data and the possible timing of a Federal Reserve interest rate cut.

Yeap Jun Rong, market strategist at IG, said oil39;s opening gains on Tuesday reflected some roadblocks in the ceasefire talks between Israel and Hamas leading market participants to…