LONDON (Reuters) -Oil drifted lower on Monday after Israel withdrew more soldiers from Gaza and committed to fresh talks on a potential ceasefire in the six-month conflict in the Middle East.

Brent crude futures dropped 90 cents or 1%, to $90.27 a barrel by 1000 GMT. U.S. West Texas Intermediate crude was down 86 cents, or about 0.9%, at $86.05.

Oil prices had gained about 4% last week on escalating geopolitical tensions.

Israel said on Sunday it had withdrawn more soldiers from southern Gaza, leaving only one brigade. The country has been reducing numbers in Gaza since the start of the year to relieve reservists and is under growing pressure from allies to improve the humanitarian situation.

Meanwhile, ceasefire talks were revived as Israel and Hamas sent teams to Egypt for talks ahead of the Eid holidays, though a Hamas official on Monday said no progress was made at a new round of talks.

Among factors affecting oil's demand outlook, a U.S. employment report on Friday suggested the economy ended the first quarter on solid ground, which could prompt the Federal Resrve to delay cuts to interest rates this year.

Investors will be scouring consumer price index data from the U.S. and China this week for further clues on the timing of possible Fed cuts and to gauge the economic health of the world's top two oil consumers.

The market at present does not have enough about it physically to warrant a charge beyond $90 a barrel to $100, said John Evans at broker PVM.

"But given the tinderbox nature of the current geopolitical crisis arenas of the Middle East and Ukraine/Russia and a keener interest from big money, the downside potential is also limited at present," he added.