Oil rises for fourth straight session on Gaza ceasefire rejection, US fuel stock data; Brent up 2% to hit $81/bbl

Brent crude futures rose $1.70, or 2.15 per cent, to $80.91 a barrel. US West Texas Intermediate crude futures were up $1.61, or 2.18 per cent, at $75.47. The Brent benchmark breached $80 a barrel for the first time since February 1 as it extended into a fourth straight session of gains, according to news agency Reuters.

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a February 16 expiry, was last trading 2.35 per cent higher at ₹6,275 per bbl, having swung between ₹6, 112 and ₹6,280 per bbl during the session, against a previous close of ₹6,131 per barrel.

Also Read: Oil trades higher for third straight day on large US fuel stock draws; Brent at $79/bbl

What’s driving crude oil prices?

-Analysts said that the recent strength is the result of the Israeli reply to the counter offer from Hamas to the original peace plan, which ensures that hostilities in the Red Sea will continue unabated.

-Israeli Prime Minister Benjamin Netanyahu rejected the latest Hamas ceasefire offer and return of hostages held in the Gaza Strip, but US Secretary of State Antony Blinken said there was still room for negotiation.

-Wider Middle East tensions have kept the market on edge since October, with limited progress in talks to end the Gaza conflict. A stronger than expected drawdown in US gasoline and middle-distillate stocks also buoyed the oil market.

-Ongoing US refinery maintenance, together with Europe being short on diesel, can help maintain the positive sentiment in oil prices for now, according to analysts. Norway’s Johan Sverdrup oilfield – the largest in the North Sea – will maintain steady production at a higher rate of 755,000 barrels per day for the rest of this year.

Where are prices headed?

Crude oil prices moved up in a volatile session after the Israeli Prime Minister rejected a cease fire deal proposed by Hamas. The diminishing hopes of a cease fire deal could further intensify conflicts in the middle-east region and support global oil prices, according to analysts.

‘’Crude oil inventories surged by 5.5 million barrels against the expected increase of 1.7 million barrels which limited gains of oil prices. We expect crude oil prices to remain volatile amid the ongoing Red sea crisis and volatility in the dollar index. Crude oil is having support at $72.80–71.90 and resistance at $74.40-75.10. In INR terms, crude oil has support at Rs6,035-5,950 while resistance is at ₹6,210-6,290,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

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Published: 08 Feb 2024, 09:59 PM IST