By Florence Tan and Gabrielle Ng
SINGAPORE (Reuters) -Oil prices rose on Monday, supported by strong factory activity in China, the world’s second-largest oil consumer, and heightened tensions in the Middle East as Israel resumed attacks on Lebanon despite a ceasefire- agree.
Brent crude futures rose 57 cents, or 0.79%, to $72.41 a barrel by 0700 GMT, while US West Texas Intermediate crude was at $68.58 a barrel, up 58 cents, or 0.85%.
“Oil prices managed to stabilize in the new week, with the continued expansion of Chinese manufacturing activities reflecting some degree of policy success from the recent stimulus efforts,” said Yeap Jun Rong, market strategist at IG.
This provided some relief in oil demand from China, he added.
A private sector survey showed Chinese factory activity grew at the fastest pace in five months in November, boosting optimism among Chinese companies just as newly elected US President Donald Trump steps up his trade threats.
Still, traders are watching developments in Syria and wondering whether they could increase tension in the Middle East, Yeap said.
A ceasefire between Israel and Lebanon came into effect on Wednesday, but both sides accused each other of violating the ceasefire.
In a statement, the Lebanese Health Ministry said several people were injured in two Israeli attacks in southern Lebanon. Airstrikes also increased in Syria as President Bashar al-Assad vowed to crush rebels who had invaded the city of Aleppo.
Last week, both benchmarks saw a weekly decline of more than 3%, reflecting easing concerns about supply risks from the Israel-Hezbollah conflict and forecasts of oversupply in 2025, even as OPEC+ is expected to continue production cuts continue.
The Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, has postponed its meeting until December 5 and is discussing delaying the increase in oil production due to start in January, OPEC+ sources told Reuters last week.
This week’s meeting will determine policy for the first months of 2025.
“The extension of production cuts would give OPEC+ more time to assess the impact of Trump’s policy announcements on tariffs and energy and also to see what China’s response will be,” said Tony Sycamore, IG’s Sydney-based market analyst.
With the group’s output widely expected to rise, the market’s focus could be on the size of the slowdown to impact crude prices, IG’s Yeap said.
“An indefinite postponement may be the best-case scenario for oil prices, as previous rounds of postponements of around a month have failed to increase oil prices in line with what OPEC+ intended.”
