Oil gains after Israel rejects ceasefire offer

Singapore — Oil extended gains on Thursday after Israel rejected a ceasefire offer from Hamas, while a weaker dollar also supported prices.

Brent crude futures rose 30c, or 0.4%, at $79.51 a barrel at 4am GMT. US West Texas Intermediate (WTI) crude futures climbed 26c, or 0.4% to $74.12 a barrel.

Wider Middle East tension has kept the market on edge since October, with limited progress in talks to end the Gaza conflict.

Israeli Prime Minister Benjamin Netanyahu rejected Hamas’ latest offer for a ceasefire and return of hostages held in the Gaza Strip, but US secretary of state Antony Blinken said there was still room for negotiation towards an agreement.

A Palestinian Hamas delegation led by senior official Khalil Al-Hayya was due to travel on Thursday to Cairo for ceasefire talks with Egypt and Qatar.

A weaker dollar also supported oil prices on Thursday as it makes crude less expensive for traders holding other currencies.

The dollar index, which measures the greenback against six major peers, fell to 103.99 at 4am GMT.

On the demand side, a stronger-than-expected drawdown in US gasoline and middle distillate stocks also buoyed the oil market.

Distillate stockpiles fell by 3.2-million barrels to 127.6-million barrels, Energy Information Administration data showed, versus expectations for a 1-million-barrel drop. Petrol stocks fell by 3.15-million barrels, compared with analysts’ estimates for a build of 140,000 barrels.

US refinery margins strengthened further due to the falling inventories, said ING analysts in a note.

“The strength in refinery margins should provide some support to crude oil, by driving stronger crude demand as refineries look to increase run rates and take advantage of stronger margins,” the ING analysts said.

The drop in petrol stocks and a 13% year-on-year rise in US oil exports to a record 4.06-million barrels a day in 2023 “both indicate stronger demand for crude”, ANZ Research said in a note.

Reuters