Oil prices continued to climb on Thursday, propelled by Israel’s rejection of a ceasefire offer from Hamas and a softer dollar, which provided support to the market.
Brent crude futures increased by 30 cents, or 0.4%, reaching $79.51 a barrel at 0400 GMT. Similarly, U.S. West Texas Intermediate crude futures saw a rise of 26 cents, or 0.4%, reaching $74.12 a barrel.
The ongoing tensions in the wider Middle East, particularly the stalled talks to resolve the Gaza conflict, have kept the oil market on edge since October. Israeli Prime Minister Benjamin Netanyahu turned down Hamas’ latest ceasefire proposal, although U.S. Secretary of State Antony Blinken indicated that negotiations could still proceed towards an agreement.
In response, a Palestinian Hamas delegation led by senior official Khalil Al-Hayya is set to travel to Cairo for ceasefire discussions with Egypt and Qatar on Thursday.
Additionally, the weakening dollar bolstered oil prices by making crude less expensive for traders holding other currencies. The dollar index, measuring the greenback against six major peers, fell to 103.99 at 0400 GMT.
Support for oil prices also came from the demand side, as U.S. gasoline and middle distillate stocks experienced stronger-than-expected drawdowns. Energy Information Administration data revealed a decline of 3.2 million barrels in distillate stockpiles to 127.6 million barrels, surpassing analysts’ projections for a 1 million-barrel drop. Gasoline stocks fell by 3.15 million barrels, contrary to expectations for a build of 140,000 barrels.
This drop in inventories, coupled with a strengthening of U.S. refinery margins, suggests increased demand for crude oil as refineries seek to boost run rates and capitalize on stronger margins, according to analysts at ING.
Furthermore, the decline in gasoline stocks and the significant year-on-year increase of 13% in U.S. oil exports to a record 4.06 million barrels per day in 2023 indicate robust demand for crude, as highlighted by ANZ Research.