Oil prices settled higher, as fading hopes of a Gaza ceasefire agreement cooled concerns about potential supply disruptions in the Middle East, but gains were stifled by a larger than expected build in U.S. crude inventories. 

At 14:30 ET, Crude Oil WTI Futures futures settled up 0.8% to $73.86 per barrel. 

Gaza ceasefire dashed after  Netanyahu rejects Hamas ceasefire deal

Israel's Prime Minister Benjamin Netanyahu rejected a ceasefire deal proposed by Hamas, dashing hopes of a ceasefire deal that keeps the risk that the conflict could broaden in the oil-rich Middle East region and potentially disrupt crude supplies.      

Netanyahu said the demands proposed by Hamas were "delusional," and said there was a lack of commitment to negotiate from Hamas. 

The remarks come a day after U.S. Secretary of State Antony Blinken said that an agreement was still possible.

US inventories jump much more than expected

U.S. oil inventories jumped by roughly 5.5M barrels in the week ended Feb. 2, well above expectations for an increase of about only 1.7M barrels. 

Gasoline inventories, one of the products that crude is refined into, fell by roughly 3.2M barrels against expectations for a build of 140,000 barrels while distillate stockpiles fell by 3.2M barrels, compared to expectations for a drop of 1M barrels.

The mixed petroleum report comes as U.S. oil output growth is forecast to slow, the EIA said Tuesday, after cutting its forecast for 2024 domestic production to 120,000 barrels per day to 170,000 bpd.