NEW YORK: Oil prices were on track for gains of 6% on a week-on-week basis amid persistent tensions in the Middle East after Israel rejected a ceasefire offer from Hamas, and tightness in refined products markets that was driven by refining outages.
Brent crude futures were up 35 cents, or 0.4%, on the day to $81.98 a barrel by 11:49 a.m. EST (1649 GMT), while US West Texas Intermediate crude futures rose 41 cents or 0.5%, to $76.63 a barrel. US crude was $1 higher earlier in the session.
Oil futures are into their fifth straight day of gains, buoyed this week by Israeli Prime Minister Benjamin Netanyahu’s rejection of a Hamas ceasefire proposal on Wednesday.
Israeli forces continued deadly air strikes on the Gaza Strip on Friday, after the bombing of the southern border city of Rafah on Thursday helped send oil prices up by around 3% in the previous session.
“With the words that, ‘no part of the Gaza Strip would be immune from Israel’s offensive’, it was not hard for oil participants to conclude that without even a passing regard for peace, there was not enough conflict-premium priced in,” said John Evans, an analyst at PVM.
Crude futures were also supported by strength in gasoline and diesel prices as significant US refinery downtime, both planned and unplanned, tightened product markets.
Gasoline futures rose 9.1% in the week to $2.33 per gallon while heating oil futures increased by 11.3% to $2.94 per gallon.
Ukraine launched drone attacks against two oil refineries in southern Russia on Friday, resulting in a fire at the Ilsky refinery. The Afipsky refinery, also in Krasnodar Krai, which borders Crimea on the Black Sea and Azov Sea coast, was the other facility in the attack.
Russia is exporting more crude in February than it planned under an OPEC+ deal, following a combination of drone attacks and technical outages at its refineries.
“Proof still needs to be provided that Russia is able to cut oil exports sufficiently even without weather-related constraints,” Carsten Fritsch, an analyst at Commerzbank, said on Friday in reference to the country’s OPEC+ cut quota.
Meanwhile, the US Treasury Department on Thursday sanctioned another three entities based in the United Arab Emirates (UAE) and one tanker registered by Liberia for violating a cap placed on the price of Russian oil by a coalition of Western nations.