By Gabrielle Ng and Katya Golubkova
SINGAPORE (Reuters) – Oil prices rose further on Monday, buoyed by escalating concerns over possible supply pressure from Middle Eastern producers due to Israel’s increased attacks on Iranian-backed forces in the region.
Brent crude futures for November delivery rose 51 cents, or 0.71%, to $72.49 a barrel as of 0330 GMT. That contract expires Monday, and the more active contract for December delivery rose 50 cents, or 0.7%, to $72.04.
U.S. West Texas Intermediate crude futures rose 43 cents, or 0.63%, to $68.61 a barrel.
Last week, Brent fell about 3% while WTI fell about 5% as demand concerns mounted after fiscal stimulus from China, the world’s second-largest economy and top oil importer, failed to materialize. succeeded in reassuring market confidence.
However, prices were supported on Monday by the possibility of a widening conflict in the Middle East involving Iran, a major producer and member of the Organization of the Petroleum Exporting Countries (OPEC), after Israel resumed its attacks on militant groups Hezbollah and Houthi had stepped up. Iran supports.
While excess inventories are a key concern for oil markets, markets broadly fear an escalation of the Middle East crisis that could dampen supplies from key producing regions, said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Israel said it bombed Houthi targets in Yemen on Sunday and expanded confrontation with Iranian allies two days after it killed Hezbollah leader Sayyed Hassan Nasrallah in an escalating conflict in Lebanon.
US Defense Secretary Lloyd Austin has authorized the military to strengthen its presence in the Middle East. The Pentagon said Sunday that if Iran, its partners or its allies target U.S. personnel or interests, Washington “will take all necessary actions to defend our interests.” people”.
In the context of Israel’s decisive attack on Hezbollah, oil prices will continue to be driven by supply and demand dynamics, said Tony Sycamore, market analyst at IG.
Given the impending end of OPEC+’s voluntary supply cuts on Dec. 1, WTI could test its 2021 lows in the $61 to $62 per barrel range, he said.
“Additionally, despite China’s recent easing, it is unclear whether this will translate into higher fuel demand given China’s progress in electrifying and decarbonizing its transportation sector,” Sycamore added.
Later on Monday, markets will await signals from Fed Chairman Jerome Powell for clues on the speed of the central bank’s monetary easing. Seven other Fed policymakers will also speak this week, ANZ analysts said in a note.
Data on vacancies and private hiring are also covered, along with ISM surveys on manufacturing and services.
With the Fed and other major central banks easing policy, some economic recovery could be on the horizon, according to Phillip Nova’s Sachdeva.
“How well demand responds to the easing of interest rates, and how much Chinese demand revives after last week’s large stimulus measures, will ultimately determine oil market dynamics,” she said.
(Reporting by Gabrielle Ng and Katya Golubkova; Editing by Christian Schmollinger and Jamie Freed)
