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Crude-oil futures rose Friday, trading higher for the week, after a strike by Israeli forces a day earlier was said to have killed more than 100 Palestinians waiting for aid in Gaza, raising tensions in the oil-rich Middle East.

Traders also waited to hear any news on whether major oil producers will extend voluntary production cuts, which expire at the end of March.

Price moves

  • West Texas Intermediate crude

    for April delivery


    rose $1.13, or 1.4%, to $79.39 a barrel on the New York Mercantile Exchange. Prices based on the front month traded around 3.8% higher for the week after ending 3.2% higher for the month of February.

  • May Brent crude

    the global benchmark, was up $1.35, or 1.7%, at $83.26 a barrel on ICE Futures Europe, with the contract trading 3% higher for the week.

  • April gasoline

    added 1.2% to $2.6129 a gallon, while April heating oil

    tacked on 1.2% to $2.682 a gallon.

  • Natural gas for April delivery

    traded at $1.855 per million British thermal units, down 0.3% in Friday dealings. Prices were poised for a more than 9% gain on the week, after posting a February loss of over 1%.

Market drivers

Gaza health officials said scores of Palestinian civilians were killed after Israeli troops opened fire near an aid convoy, The Wall Street Journal reported Thursday.

President Joe Biden said the deaths would complicate talks around a cease-fire between Israel and Hamas, according to news reports. Biden had said earlier this week that he had seen prospects for an agreement as early as Monday.

The reports of fresh tensions in Gaza increased “risk sentiment,” Ewa Manthey and Warren Patterson, commodity strategists at ING, said in a note.

Read: War wasn’t enough to budge oil prices. Here’s what could spark a big move.

Investors are also awaiting a decision by members of OPEC+ — made up of the Organization of the Petroleum Exporting Countries and its allies — on whether to extend voluntary production cuts.

“Sticking to the voluntary production cuts until the end of the year would be a strong signal and should therefore be seen as price-positive” because the oil market would remain tight until year-end, Carsten Fritsch, commodity strategist at Commerzbank, said in a note. An extension only into the second quarter is “likely to be priced in and should therefore not move prices significantly.”

OPEC+ countries were considering an extension of the cuts, which amount to 2.2 million barrels a day, into the second quarter, Reuters reported earlier this week, with some officials pointing to the prospect of an extension to year-end. The report said a decision on an extension is expected in the first week of March.

The oil market is “well balanced,” with prices well supported in the high $70s, with a path to $80s in sight if “OPEC+ confirms rollover of its cuts and once the [U.S. Federal Reserve] clarifies timing for rate cuts,” said Manish Raj, managing director at Velandera Energy Partners.

The high $70s oil price is ‘so attractive for U.S. producers that drilling rigs are firing on all cylinders, creating a nuance for OPEC, who is annoyed by seeing its lunch eaten by the U.S. shale.’

— Manish Raj, Velandera Energy Partners

The high $70s oil price is “so attractive for U.S. producers that drilling rigs are firing on all cylinders, creating a nuance for OPEC, who is annoyed by seeing its lunch eaten by the U.S. shale,” he told MarketWatch. 

“OPEC has found itself in a hole that keeps getting deeper” with more U.S. shale production, “and yet OPEC has no choice but to keep extending its cuts that makes even more room for the U.S. shale,” said Raj.

Also see: China’s grip on rare earth elements is slipping. Investors should take note.

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