Oil flat, reversing gains after news of Gaza ceasefire

NEW YORK Wed Nov 21, 2012 11:20pm IST

A worker holds up a fuel pump nozzle after filling up the tank of a car at a petrol station in Cairo October 3, 2012. REUTERS/Mohamed Abd El Ghany/Files

A worker holds up a fuel pump nozzle after filling up the tank of a car at a petrol station in Cairo October 3, 2012.

Credit: Reuters/Mohamed Abd El Ghany/Files

Related Topics

NEW YORK (Reuters) - Oil erased early gains on Wednesday after Egyptian officials said a truce had at last been reached in the Gaza Strip, ending eight days of fighting between Israel and Hamas.

The midday retreat extended several days of volatile oil trading, with prices whipsawed between fears of a deepening conflict that could engulf regional oil superpowers and hope for a ceasefire. Prices had earlier risen by more than $1.50 a barrel after an explosion on a Tel Aviv bus.

U.S. government data showing an unexpectedly large drop in weekly fuel stockpiles had also lent support to gasoline and heating oil prices, which outperformed crude.

Brent crude futures were up 25 cents, or 0.2 percent, at $110.08 a barrel by 12:25 p.m. EST (1725 GMT), off an earlier session-high of $111.46.

U.S. crude rose dipped 8 cents to $86.67, with trading activity winding down ahead of the U.S. Thanksgiving Day holiday on Thursday. Benchmark gasoline and heating oil futures rose more than 0.5 percent on the day.

At midday, Egypt's foreign minister announced a truce between Israeli and Palestinian forces would begin at 1900 GMT, ending a series of air strikes and rocket attacks that had unnerved the region and oil traders. That came despite an explosion on a bus in Tel Aviv earlier in the day that some feared might thwart ceasefire talks.

Although little oil is produced in Israel, concern that major hydrocarbon producing Arab nations could become involved in the conflict have aroused fears that supplies from the Gulf can be disrupted.

If the truce holds, however, focus may return to the market's moribund underlying fundamentals. Euro zone finance ministers ended a meeting in Brussels on Wednesday without agreement on the next tranche of loans to Greece.

"The Middle East tensions could continue to give prices some life in the near term but we suspect that bearish economic factors will be dominant," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.

And U.S. economic data offered limited cause for hope. Manufacturing grew in November at its quickest pace in five months and new jobless claims dropped, but consumer sentiment showed only a marginal improvement.

U.S. crude and refined product stocks fell last week as plants processed more crude and imports dropped, data from the U.S. Energy Information Administration showed.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Coal Reforms

Coal Reforms

Factbox - India pushes ahead with coal reforms  Full Article 

Apple Result

Apple Result

Apple's iPhone sales beat Street but iPad volumes slide  Full Article 

Airport Accident

Airport Accident

Total CEO de Margerie killed in Moscow plane accident - airport spokeswoman.  Full Article 

Nadella's Paycheck

Nadella's Paycheck

New Microsoft CEO Nadella's pay tops $80 mln with big stock awards.  Full Article 

Deregulation Impact

Deregulation Impact

Private fuel retailers to dip toe, not dive back, into India  Full Article 

JLR China

JLR China

JLR sees 20 percent growth in China sales this year - exec  Full Article 

An RBI First

An RBI First

RBI releases minutes of financial stability council's Aug meet  Full Article 

IBM Earnings

IBM Earnings

IBM ditches 2015 operating EPS target, shares slump 7 pct  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage