"Delusional" Ceasefire Proposal Boosts Oil - But Prices Remain Rangebound

Meanwhile, Moller-Maersk chief says hazards in the Red Sea are worsening: File Image/Pixabay 

Crude traders fixated on Middle East tensions reacted on Thursday of Israel rejecting Hamas's offer of a ceasefire by causing oil prices to rise again, more substantially than in the previous three sessions.

After breaching $80 per barrel for the first time since the beginning of the month, Brent rose $1.70 to $80.91 per barrel by 1525 GMT; West Texas Intermediate was up $1.61 at $75.47 per barrel.

After Israel called the ceasefire proposal "delusional," Hamas urged Palestinian armed factions to continue fighting; and this in turn compelled U.S. Secretary of State Antony Blinken to declare that negotiations could continue: "That's what we intend to do."

Also supporting oil prices on Thursday was earlier news from the U.S. Energy Information Administration that domestic gasoline stocks fell by 3.15 million barrels last week compared with expectations for a 140,000 barrel build; also, distillates fell 3.2 million barrels compared with expectations for a 1 million barrel draw.

But crude stocks climbed by 5.5 million barrels instead of an expected 1.9 million barrel build due to production recovering from a cold snap in some states.

Tamas Varga, analyst at PVM, said, "Ongoing U.S. refinery maintenance, together with Europe being short on diesel, can help maintain the positive sentiment for now."

Still, market performance was hardly what it could be, according to Royal Bank of Canada analysts including Michael Tran and Helima Croft, who wrote in a note that "Both oil-market sentiment and conviction remain low; the market still cannot break flat price out of the current range."

Also on Thursday, Hardeep Singh Puri, minister of petroleum and natural gas for India, made headlines by stating during the India Energy Week conference in Goa that "The world is grateful to India for buying Russian oil; it's not that they don't want us to buy Russian oil.

"If we start buying more of the Middle Eastern oil, the oil price will not be at $75 or $76, it will be $150."

Also on Thursday, Vincent Clerc, chief executive of A.P. Moller-Maersk, told Bloomberg with regard to ongoing hostilities against tankers in the Red Sea that "The amount or the range of weapons that are being used for these attacks is expanding and there is no clear line of sight to when and how the international community will be able to mobilize itself and guarantee safe passage for us."