Oil futures: Brent tops $81/b as Gaza ceasefire talks falter

Quantum Commodity Intelligence – Crude oil futures Thursday were around 2.5% higher as the week's firm trend continued, underpinned by stronger refined products and faltering ceasefire talks over the Gaza conflict.

Front-month Apr24 ICE Brent futures were trading at $81.33/b (1735 GMT), compared to Wednesday's settle of $79.21/b and the highest prices since last week.

At the same time, Mar24 NYMEX WTI was trading at $75.86/b versus Wednesday's settle of $73.86/b.  

"Fundamentals for oil and products are getting more bullish based on recent data even though prices in the short term continue to struggle as it tries to assess the potential for Federal Reserve interest rate cuts and the prospects for a ceasefire deal in the Gaza Strip," said Phil Flynn of The Price Futures Group.

Prices initially wobbled after the EIA report on Wednesday revealed US crude oil stocks increased by 5.5 million barrels last week, but the crude build was more than offset by the refined products sector.

US gasoline stocks sank to a near one-month low, while demand jumped to its highest level so far this year and output was static, weekly EIA data showed.

"The fall in US gasoline stocks has provided further upside momentum to gasoline cracks with the prompt RBOB crack breaking above $20/b, a level not seen since September last year," said Warren Patterson, head of ING's commodity research. "The tightening in middle distillates also continues to push the prompt heating oil crack higher."

US distillate stocks fell for the fourth straight week, dropping 3.2 million barrels to 127.6 million barrels.

Global distillate prices also continued to climb as the Asian 10ppm gasoil crack breached three-month highs this week, with scheduled refinery maintenance towards the end of the month putting pressure on supply.

Gaza

Gaza ceasefire talks continued to rumble on, but Israel's Prime Minister Benjamin Netanyahu has rejected the latest Hamas ceasefire terms. He said negotiations with Hamas were "not going anywhere" and described their terms as "bizarre".

However, US Secretary of State Antony Blinken rebuked Jerusalem's operations in Gaza, warning Israel that it does not have "a license to dehumanize others."

On Thursday, a senior Hezbollah operative  was reportedly killed in alleged Israeli strike, raising fears of an escalation on Israel's northern border. 

Amid the broader conflict, Iraq said Thursday that repeated US strikes against Iranian-backed militant groups operating in Iraq are pushing the Iraqi government towards ending the mission of the US-led coalition in the country.

Meanwhile, China remains a drag on commodities markets after the latest data revealed that the consumer price index (CPI) dropped by 0.8% y-on-y in January, marking a fourth consecutive monthly decline. Factory-gate prices also tumbled for the 16th straight month, as the producer price index (PPI) retreated by 2.5% y-on-y in January.

But Goldman Sachs said in a report that China's property slump and slew of defaults are unlikely to rattle overseas creditors or deter domestic banks from lending to cash-strapped developers.

"Many of the losses have already been taken," said Goldman, but added, "the efforts to ensure continuing supply of bank credit to developers reinforce our view that restructuring efforts are likely to take many years, and that the China property sector will be on an L-shaped path."