Oil edged higher as technical levels supported prices, even after Hamas said it agreed to a cease-fire proposal by Qatar and Egypt. 

West Texas Intermediate pared earlier gains to settle above US$78 a barrel, after a statement about the proposal moved on the militant group’s telegram channel. While Israel’s Channel 12 said Israel was studying the proposal, the nation’s government didn’t immediately provide an official comment. Traders said an acceptance of the proposal could trim crude prices by $2 to $3 a barrel. 

“Traders are awaiting confirmation from Israel before trading on the headline,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth. “Over $7 of geopolitical risk premium has been unwound over the past two weeks as the conflict avoided additional escalation.”

Still, bullish tailwinds are supporting crude. Saudi Arabia recently demonstrated confidence in demand by hiking prices for Asia, and technical measures are signaling that last week’s plunge was overdone. 

Oil is up almost 10 per cent this year, with spillover from the war in Israel and Gaza, most notably disruptions to shipping in the Red Sea, among the key drivers. Earlier, Israel’s military began moving civilians out of Rafah, a possible prelude to a long-expected attack on the Gazan city.

Hamas and Israel have been negotiating indirectly via Qatar, Egypt and the U.S. on an agreement that would see the release of Israeli hostages held in Gaza in exchange for Palestinians detained in Israeli jails. It would also include a pause in fighting. 

Meanwhile, OPEC and its allies are widely expected to press on with supply cuts in the second half of this year in an attempt to prevent a surplus. Group laggards Iraq and Kazakhstan have outlined plans on how they will curb flows to compensate for producing above their quotas earlier in the year. 

Prices:

• WTI for June delivery rose 37 cents to settle at $78.48 barrel in New York.
• Brent for July settlement climbed 37 cents to settle at $83.33 a barrel.