Oil steady as Gaza ceasefire talks gain traction

Oil prices were little changed on Friday, with global benchmark Brent hovering above $85 per barrel, as the possibility of a ceasefire in Gaza gained traction.

Brent crude futures were down 2 cents to $85.76 a barrel by 1017 GMT. US crude futures were up 1 cent at $81.08 per barrel.

“A ceasefire would help calm fears that the situation in Gaza might spread more broadly across the region,” IG analyst Tony Sycamore said.

“Additionally, it may encourage the Houthis to stand down and allow oil tankers to pass through the Red Sea, which would also be a positive development in terms of helping to balance out the supply and demand dynamics.”

US Secretary of State Antony Blinken said on Thursday he believed talks in Qatar could reach a Gaza ceasefire agreement between Israel and Hamas.

Blinken met Arab foreign ministers and Egypt’s President Abdel Fattah El-Sisi in Cairo as negotiators in Qatar centred on a truce of about six weeks.

Meanwhile, Russia launched the largest missile and drone attack on Ukrainian energy infrastructure of the war to date on Friday, hitting the country’s largest dam and causing blackouts in several regions, Kyiv said.

Ukraine has in recent weeks masterminded a series of attacks on Russian energy infrastructure. The United States has reportedly urged Kyiv to halt strikes on facilities, warning that they risk provoking retaliation and driving up oil prices.

In the United States, the world’s top oil consumer, gasoline product supplied, a proxy for demand, slipped below 9 million barrels for the first time in three weeks, indicating a possible slowdown in crude demand.

However, consultancy FGE said preliminary weekly data for the first half of March that showed on-land crude and main product stocks at major oil hubs globally falling by almost 12 million barrels, compared with the 2015 to 2019 average draw of 6 million barrels, could be bullish for oil.

Meanwhile, the US dollar strengthened after the Swiss National Bank’s surprise interest rate cut bolstered global risk sentiment.

A stronger dollar makes oil more expensive for investors holding other currencies, dampening demand.