Oil Gains 2% as Israel Rejects Gaza Ceasefire Deal, US Gas Inventory Plummets

Crude oil prices have ticked up over 2% in the aftermath of the rejection of a ceasefire in Gaza, with Israeli forces launching new air strikes on Rafah city, and the Gaza Health Ministry saying that 130 people had been killed in the past 24 hours. U.S. Secretary of State Antony Blinken visited the Middle East this week, raising hopes of a ceasefire deal during his trip. However, Israeli Prime Minister Benjamin Netanyahu vowed to continue the war until “victory”. 

Earlier this week, Hamas offered a 4-½-month ceasefire deal that would have resulted in a hostage swap and the withdrawal of Israeli troops from Gaza, which the Israelis firmly rejected, while Blinken said there was still room for negotiation, Reuters reported.  On Thursday at 11:12 a.m. ET, Brent crude oil was trading at $80.76, up 1.96%, while West Texas Intermediate (WTI) was trading at $75.34, up 2% on the day. According to the Gaza Health Ministry, which is controlled by Hamas, some 27,840 Gazans have been killed in the war since October 7. According to the Israeli Defense Forces, 1,200 Israelis have been killed. 

The rejection of a ceasefire deal comes a day after the U.S. launched one of a series of retaliatory strikes following the death of three American soldiers in Jordan. Wednesday’s U.S. drone strike in the Iraqi capital killed a commander of Iran-backed Kataib Hezbollah, even as the group has suspended attacks on U.S. targets in the wake of the Jordan incident and ostensibly under pressure from Tehran. 

Also providing stimulus to prices on Thursday was a stronger-than-expected draw on U.S. gasoline and distillate stocks, from the Wednesday data release by the Energy Information Administration (EIA). The EIA showed a 3.2-million-barrel draw on distillate stockpiles, while expectations were for a 1-million-barrel drop. At the same time, gasoline stockpiles drew down by 3.15 million barrels, when analysts were expecting a far smaller draw.