April 29 (Reuters) - Oil prices dipped on Monday as Israel-Hamas ceasefire talks in Cairo tempered fears of a wider Middle East conflict, while U.S. inflation data dimmed the prospect of interest rate cuts soon.
Brent crude futures for June , which expire on Tuesday, were down by 70 cents, or 0.8%, to $88.80 a barrel by 1245 GMT. The more active July contract fell 52 cents, or 0.6%, to $87.69 a barrel.
U.S. West Texas Intermediate (WTI) futures were down 58 cents, or 0.7%, at $83.27 a barrel.
Israeli airstrikes killed at least 25 Palestinians and wounded many others on Monday, as Hamas leaders arrived in Cairo for a new round of talks with Egyptian and Qatari mediators.
Egypt is hopeful but waiting for a response on the plan from Israel and Hamas, Egyptian Foreign Minister Sameh Shoukry said.
"With little other fresh news, the possible cooling of the Gaza environment sees oil prices slip," said John Evans of oil broker PVM.
Markets were also on watch for the U.S. Federal Reserve's May 1 monetary policy review.
"The language and forward forecasts will be pored over by all market participants," PVM's Evans said.
Investors are cautiously pricing a higher probability that the Fed could hike interest rates by a quarter percentage point this year and next as inflation and the labor market remain resilient.
U.S. monthly inflation rose moderately in March, putting a damper on expectations of rate cuts in the near future. Lower inflation would have increased the likelihood of interest rate cuts, which tend to stimulate economic growth and oil demand.
"The sticky U.S. inflation sparks concerns for 'higher-for-longer' interest rates", leading to a stronger U.S. dollar and putting pressure on commodity prices, independent market analyst Tina Teng said.
A stronger dollar makes oil more expensive for those holding other currencies.
By contrast, an early look at April inflation data from the euro zone, from Spain and Germany, offers a mixed picture for the European Central Bank, but looks unlikely to derail a June rate cut.
Inflation data from the wider euro zone is to be released on Tuesday.
Reporting by Deep Vakil in Bengaluru, Colleen Howe and Mohi Narayan; editing by Michael Perry, Jason Neely and Alexander Smith
