February 09, 2024 [Oil Price]- After a weak start to the week, crude oil benchmarks appear set for a weekly gain after the news broke that Israel has rejected a ceasefire offer from Hamas.
Israeli Prime Minister Benjamin Netanyahu said there was “no other solution than total victory,” which contributed to the bullish oil sentiment. According to Bloomberg, oil’s gains this week have offset almost all of the losses from last week, which were prompted by hopes for a ceasefire.
After starting the week at around $77 per barrel, Brent crude may end at $80 or slightly above, while West Texas Intermediate has topped $76 per barrel after starting below $72 on Monday.
Benchmarks made some marked gains on Thursday amid renewed Israeli bombing in Gaza after the government rejected the ceasefire offer, prompting expectations of a prolonged and possibly extended conflict.
The latter part of the expectation was a reaction to the news that the Iraqi government could reconsider its approval for the mission of a U.S.-led coalition in the country as U.S. forces strike Iran-linked groups on Iraqi territory.
According to Baghdad government spokesman Yahya Rasool, the U.S. coalition “has become a factor for instability and threatens to entangle Iraq in the cycle of conflict”.
Even so, oil production has yet to be affected by events in the Middle East, Reuters noted in a report on prices, saying Norway and Guyana were ramping up their output and Russia has exporting more crude oil since the start of this month amid Ukrainian drone attacks on refineries.
“I still expect the rangebound trading that we have become accustomed to recently will continue given the comfortable oil balance,” ING chief commodity strategist Warren Patterson said, as quoted by Reuters.
Separately, Patterson said in a note that “Refined product draws in the US over the last week have been supportive for margins, while Red Sea disruptions and refinery outages also continue to provide support to refined product markets, particularly middle distillates.”
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