A Sinjel resident who requested anonymity told Reuters he saw cars whose occupants he recognised as Jewish settlers nearby minutes before the incident.
The Palestinian Foreign Ministry blamed the incident on "Jewish terrorist elements" but Israeli police, who sent investigators to the scene, said in a statement that the fire "was mostly likely caused due to a short circuit and not a deliberate ignition".
Most countries deem the settlements, which take up land Palestinians seek for a state, illegal. Israeli disputes this.
The Popular Front for the Liberation of Palestine militant group claimed Saturday night's drive-by shooting in Huwara, 13 km (8 miles) from Sinjel, that wounded two soldiers. It was the third time in a month that Israelis had been fired upon there.
In a Feb. 26 attack, a gunman from Hamas killed two brothers from a nearby Jewish settlement as they sat in a car. That sparked a revenge rampage by settlers in which a Palestinian was killed and properties torched.
Over the past year, Israeli forces have made thousands of arrests in the West Bank and killed more than 250 Palestinians, including fighters and civilians, while more than 40 Israelis and three Ukrainians have died in Palestinian attacks.
