Oil up 2% on Gaza ceasefire rejection and U.S. stock data

A stronger-than-expected drawdown in U.S. gasoline and middle-distillate stocks also buoyed the oil market.

Oil prices gained over 2% on Thursday as investors considered the impact of Israel’s rejection of a ceasefire offer from Hamas and unexpected drops in U.S. fuel stocks.

Brent crude futures rose $1.70, or 2.15%, to $80.91 a barrel by 1525 GMT. U.S. West Texas Intermediate crude futures were up $1.61, or 2.18%, at $75.47.

The Brent benchmark breached $80 a barrel for the first time since Feb. 1 as it extended into a fourth straight session of gains.

"The recent strength is the result of the Israeli reply to the counteroffer from Hamas to the original peace plan, which ensures that hostilities in the Red Sea will continue unabated," said PVM analyst Tamas Varga.

Israeli Prime Minister Benjamin Netanyahu rejected the latest Hamas ceasefire offer and return of hostages held in the Gaza Strip, but U.S. Secretary of State Antony Blinken said there was still room for negotiation.

Diplomatic efforts continue, with a Hamas delegation arriving in Cairo on Thursday for ceasefire talks with mediators Egypt and Qatar.

Wider Middle East tensions have kept the market on edge since October, with limited progress in talks to end the Gaza conflict.

A stronger-than-expected drawdown in U.S. gasoline and middle-distillate stocks also buoyed the oil market.

The draw in fuel stocks, combined with a rise in crude stocks, was a sign of U.S. refinery maintenance, Varga said.

"Ongoing U.S. refinery maintenance, together with Europe being short on diesel, can help maintain the positive sentiment for now," he added.

Elsewhere, Norway’s Johan Sverdrup oilfield – the largest in the North Sea – will maintain steady production at a higher rate of 755,000 barrels per day (bpd) for the rest of this year, Aker BP said. Its original planned capacity was 660,000 bpd.