No Israel/Hamas Ceasefire Concerns Traders, Oil Ekes Out Gains

Meanwhile, the Saudis gamble on the possibility of increased demand: File Image/Pixabay

Despite Israel's repeated promise to invade the southern Gaza city of Rafah and wipe out Hamas, oil traders on Monday were reportedly concerned that both parties had not yet reached a ceasefire agreement – and this caused two key benchmarks to eke out modest gains.

Brent settled up 37 cents at $83.33 per barrel, and West Texas Intermediate also settled up 37 cents to $78.48 per barrel.

Israel rejected a ceasefire proposal that Hamas had agreed to, and this disappointed analysts such as Andrew Lipow, president of Lipow Oil Associates, who said, "Any ceasefire agreement would lessen the tension in the Middle East."

John Kilduff, founding partner with Again Capital, added, "Markets are a little jaded about geopolitical risk from the war; I think you're going to have to see more kinetic activity to move the markets."

For her part, Rebecca Babin, a senior energy trader at CIBC Private Wealth, pointed out that "Over $7 of geopolitical risk premium has been unwound over the past two weeks as the conflict avoided additional escalation."

Meanwhile, the Israel Defense Forces on Monday told some 100,000 Palestinians to leave Rafah, heralding another rise in regional tension.

According to a price list seen by Bloomberg, Saudi Arabia took the opportunity to raise the price of its flagship crude headed to Asia for the third month in a row, by 90 cents to $2.90 per barrel, which suggests the kingdom anticipates robust demand and perhaps supply challenges.

In other oil news on Monday, Shell said in a statement that it is preparing to divest from downstream operations in South Africa as a result of an internal portfolio review; the oil giant holds a majority share in Shell Downstream SA, which arose from an agreement between Shell South Africa and Thebe Investment Corporation 10 years ago.

The partnership was supposed to merge Shell's marketing and refining business with Thebe, a black empowerment group, but there was heated debate over the value of Thebe's stake in the project.