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Brent crude futures were down 2 cents to $85.76 a barrel by 1017
GMT. U.S. crude futures were up 1 cent at $81.08 per barrel.
"A ceasefire would help calm fears that the situation in Gaza
might spread more broadly across the region," IG analyst Tony
Sycamore said.
"Additionally, it may encourage the Houthis to stand down and
allow oil tankers to pass through the Red Sea, which would also
be a positive development in terms of helping to balance out the
supply and demand dynamics."
U.S. Secretary of State Antony Blinken said on Thursday he
believed talks in Qatar could reach a Gaza ceasefire agreement
between Israel and Hamas.
Blinken met Arab foreign ministers and Egypt's President Abdel
Fattah El-Sisi in Cairo as negotiators in Qatar centred on a
truce of about six weeks.
Meanwhile, Russia launched the largest missile and drone attack
on Ukrainian energy infrastructure of the war to date on Friday,
hitting the country's largest dam and causing blackouts in
several regions, Kyiv said.
Ukraine has in recent weeks masterminded a series of attacks on
Russian energy infrastructure. The United States has reportedly
urged Kyiv to halt strikes on facilities, warning that they risk
provoking retaliation and driving up oil prices.
In the United States, the world's top oil consumer, gasoline
product supplied, a proxy for demand, slipped below 9 million
barrels for the first time in three weeks, indicating a possible
slowdown in crude demand.
However, consultancy FGE said preliminary weekly data for the
first half of March that showed on-land crude and main product
stocks at major oil hubs globally falling by almost 12 million
barrels, compared with the 2015 to 2019 average draw of 6
million barrels, could be bullish for oil.
Meanwhile, the U.S. dollar strengthened after the Swiss National
Bank's surprise interest rate cut bolstered global risk
sentiment.
A stronger dollar makes oil more expensive for investors holding
other currencies, dampening demand.
(Reporting by Natalie Grover, Florence Tan in Singapore and
Laila Kearney in New York; Editing by Jamie Freed and Mark
Potter)
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