A Repsol Oil Operations oil drilling rig pounds into the desert searching through thousands of feet for and oil reserve in El-Sharara, Libya.
Benjamin Lowy | Getty Images
Oil prices were largely flat Tuesday as investors monitored reports that Israel has proposed a two-month pause of fighting in Gaza, which would mark significant de-escalation in the war.
The West Texas Intermediate contract for March lost 15 cents, or 0.2%, to trade at $74.61 a barrel. The Brent contract for March lost 26 cents, or 0.32%, to trade at $79.80 a barrel.
The two-month pause in fighting would come in exchange for Hamas releasing the remaining hostages, an Israeli government official told NBC News. It would be the longest pause since the war began in October.
But Hamas has rejected the proposal, a senior Egyptian official told the Associated Press. The militant group is demanding that Israel end its offensive and withdraw from Gaza, the Egyptian official said.
The Israeli military has encircled the southern city of Khan Younis as fierce fighting continues in Gaza. Twenty-one Israeli soldiers died in a single attack this week, the biggest loss of life for the military since the offensive began.
In a bullish sign for the market, China is considering a $278 billion rescue package to boost its struggling stock market, according to Bloomberg News. A rescue package in China would raise oil demand expectations, said Phil Flynn, an analyst with the Price Futures Group. Traders have worried for months that a slowing economy in China would bring down crude demand.
Oil prices rallied about 2% on Monday after a suspected Ukrainian drone strike against a major Russian fuel terminal on the Baltic Sea highlighted the geopolitical threats to crude supplies.
“The attack by Ukrainian forces on the Russian company Novatek in the Baltic is a timely reminder that a bigger, more influential war is still waging on,” John Evans with PVM Oil Associates wrote Tuesday in a note.
The U.S. and Britain on Monday also launched another round of airstrikes against Houthi militants in Yemen. The militants have repeatedly attacked commercial vessels in the Red Sea over the past two months, forcing container ships and oil tankers to pause transit through the key waterway.
On the supply side, the signals were mixed with cold weather hitting output in the U.S. as Libya restarts production in a major oilfield.
Oil output in North Dakota, the third largest crude producing state in the U.S., was down 400,000 barrels per day as of Friday due to a blast of Arctic cold this month, according to state authorities.
Lynn Helms, North Dakota’s director of Mineral Resources, said it could take a month for production to return to normal: “January is going to be a very, very bad month in terms of production numbers,” Helms said in a webinar Friday.
The potential threats to crude supplies have been tempered by Libya restarting production at the Sharara oilfield, which was shut down for about two weeks due to protests. The oilfield has the capacity to produce 300,000 barrels per day.
Don’t miss these stories from CNBC PRO:
