Environment

Oil posts weekly gain as Israel bombs southern Gaza city after rejecting Hamas ceasefire offer

A picture taken from southern Israel near the border with the Gaza Strip on December 21, 2023, shows smoke billowing following Israeli bombardment in the Palestinian territory amid ongoing battles with the Palestinian Hamas militant group.
Jack Guez | AFP | Getty Images

Oil prices are poised to post a weekly again as hopes for a ceasefire in the Israel-Hamas war appeared to fade.

Crude prices inched higher Friday with the West Texas Intermediate contract for March last up 7 cents to trade at $76.29 a barrel. The Brent contract was lower, last trading at $81.57 a barrel, down 6 cents.

But both U.S. crude and the global benchmark are on track to finish out the week more than 5% higher as the conflict Middle East drags on with no end in sight.

Israel is pressing ahead with its war in Gaza, bombarding the southern city of Rafah on the Egyptian border after Prime Minister Benjamin Netanyahu rejected Hamas’ proposed terms for a ceasefire.

And the U.S. killed a senior militant leader in a drone strike in Baghdad this week, raising tensions with the government of Iraq, a major oil producer.

Oil often pops on tensions in the Middle East, but prices have struggled to break out of a range as the conflict has not led to a substantial disruption of crude supplies so far.

Supply and demand fundamentals have also weighed on prices in recent months, as record U.S. production and a faltering economy in China have some traders worried that the market is oversupplied.

But crude prices found support this week after the U.S. Energy Department forecast that production in the U.S. will grow at a slower pace this year than originally expected. The department expects a slight global supply deficit this year.

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