Oil prices drop further

LONDON: Oil prices extended losses on Thursday as markets anticipated resolutions to the Gaza conflict and Russia-Ukraine gas dispute.

"While a truce in either of these situations is far from close, a potential solution will no doubt ease some geopolitical fears" that have been supporting oil prices in recent days, said Barclays Capital analyst Kevin Norrish.

New York's main contract, light sweet crude for delivery in February, fell 1.29 dollars to 41.34 dollars per barrel.

Brent North Sea crude for February dropped 1.17 dollars to 44.69 dollars a barrel in late afternoon trade on London's InterContinental Exchange.

Crude futures had on Wednesday tumbled by around five dollars on news of a sharp and unexpected increase in energy stockpiles in the United States.

On Thursday meanwhile, Britain, France and the United States presented a draft Security Council resolution to Arab foreign ministers calling for an immediate ceasefire in the Gaza Strip.

A Western diplomat, speaking on condition of anonymity, said Britain, in agreement with France and the United States, presented the new text to Arab foreign ministers at a brief meeting.

The Arab ministers earlier Thursday indicated that they were determined to push for a UN Security Council vote on their own revised draft resolution demanding an immediate and permanent ceasefire in the Gaza Strip.

Arab ministers are under heavy public pressure to secure an immediate end to Israel's 13-day military onslaught in Gaza that has killed more than 700 Palestinians.

"Ongoing concerns regarding Israel's conflict in Gaza remain a background feature (for the oil market), as does the Russian-Ukraine dispute," said Sucden analyst Nimit Khamar.

EU Energy Commissioner Andris Piebalgs told AFP Thursday that an agreement had not been reached with Russia on restoring the flow of gas through Ukrainian pipelines to Europe.

Russia earlier pledged to restore gas supplies to the EU once observers were in place to monitor pipelines in Ukraine as the crisis deepened in eastern Europe, forcing heating cutbacks.

After a brief meeting in the European Parliament, the heads of Russia's and Ukraine's gas firms committed to having monitors stationed in Ukraine to check supplies to Europe, which have been cut in the dead of winter.

Russia, which cut supplies for Ukraine's domestic market on January 1 due to a payments dispute, has accused Ukraine of stealing gas intended for Europe.