Brent gains some after Israel rejects ceasefire offer

The front-month ICE Brent contract moved $0.28/bbl higher on the day, to trade at $79.30/bbl at 09.00 GMT.

PHOTO: Offshore oil rig in the middle of the sea. Getty Images

Upward pressure:

Brent futures moved higher after Israel dismissed a ceasefire proposal for Gaza, shattering hopes for a potential resolution in the ongoing four-and-a-half-month conflict between the Israel Defence Forces (IDF) and Hamas militants.

Israeli Prime Minister Benjamin Netanyahu on Wednesday called the offer for a ceasefire in Gaza “delusional”, Reuters reported. He further reiterated Israel’s stand to completely vanquish the Iran-backed militant group.

Brent’s prices also gained after the US Energy Information Administration (EIA) reported a drawdown in US gasoline and distillate stocks in the week ended 2 February.

The US gasoline stocks dropped by 3.15 million bbls to 251 million bbls last week, driven by an increase in demand. The country's distillate stocks, which include diesel and gasoil, also fell for the third consecutive week. The stocks declined by 3.22 million bbls to 127.58 million bbls.

Brent futures rallied “after the Energy Information Administration (EIA) released its weekly inventory statistics,” said SPI Asset Management’s managing partner Stephen Innes. “This surge was driven by a larger-than-anticipated decline in U.S. fuel stocks and escalating geopolitical tensions in the Middle East,” he added.

Downward pressure:

Brent prices felt some downward pressure after the EIA also reported a staggering rise in US crude stocks.

Commercial US crude inventories rose by 5.5 million bbls on the week, to 427.43 million bbls on 2 February, according to the EIA. The weekly stock build was much bigger than the American Petroleum Institute's (API) projection of 674,000 bbls build.

By Aparupa Mazumder

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