Oil extended gains on Thursday after Israel rejected a ceasefire offer from Hamas, while a weaker dollar also supported prices. Brent crude futures rose 35 cents, or 0.4%, at $79.56 a barrel at 0730 GMT. U.S. West Texas Intermediate crude futures climbed 31 cents, or 0.4% to $74.17 a barrel. Wider Middle East tensions have kept the market on edge since October, with limited progress in talks to end the Gaza conflict. Israeli Prime Minister Benjamin Netanyahu rejected Hamas’ latest offer for a ceasefire and return of hostages held in the Gaza Strip, but U.S. Secretary of State Antony Blinken said there was still room for negotiation toward an agreement. A Palestinian Hamas delegation led by senior official Khalil Al-Hayya was due to travel on Thursday to Cairo for ceasefire talks with Egypt and Qatar. A weaker dollar also supported oil prices on Thursday as it makes crude less expensive for traders holding other currencies. The dollar index, which measures the greenback against six major peers, fell to 104.00 at 0730 GMT. On the demand side, a stronger-than-expected drawdown in U.S. gasoline and middle distillate stocks also buoyed the oil market. Distillate stockpiles fell by 3.2 million barrels to 127.6 million barrels, Energy Information Administration data showed, versus expectations for a 1 million-barrel drop. Gasoline stocks fell by 3.15 million barrels, compared with analysts’ estimates for a build of 140,000 barrels. On the back of those falling inventories, U.S. refinery margins continued to strengthen, said ING analysts in a note. “The strength in refinery margins should provide some support to crude oil, by driving stronger crude demand as refineries look to increase run rates and take advantage of stronger margins,” the ING analysts said.