Oil prices dip after Middle East tensions spark bumper weekly gain
2024.10.06 21:39
Investing.com– Oil prices fell in Asian trade on Monday, retreating after a flare-up in Middle East tensions sparked their biggest weekly gain in over a year, with focus squarely on the long-running Israel-Hamas war.
Some positive U.S. payrolls data also aided oil’s rally last week, on bets that the economy was more resilient than initially feared. But oil prices were hit with some profit-taking on Monday.
expiring in December fell 0.5% to $77.64 a barrel, while fell 0.5% to $73.32 a barrel by 20:49 ET (00:49 GMT). Both contracts rallied between 8% and 10% last week.
Still, trading volumes were somewhat limited on account of golden week holidays in China. Chinese markets are set to reopen on Tuesday.
Supply disruptions in focus on 1-year anniversary of Israel-Hamas war
Oil bulls built on bets of Middle East supply disruptions as the Israel-Hamas war showed few signs of cooling. Monday marked a year since a Hamas attack on Israel triggered renewed hostilities between the two.
Reports on Monday said Hezbollah rockets had hit Israel’s third-largest city of Haifa.
Israel struck Hezbollah targets in Lebanon and the Gaza Strip on Sunday, days after Iran launched a large-scale missile strike against Israel over its activities against Hezbollah and Hamas.
Reports said Israel was considering attacking Iran’s oil production facilities- a move that could disrupt oil supplies and mark a drastic escalation in the conflict.
But analysts at ANZ downplayed the potential impact of the Middle East conflict on supplies, stating that they did not see a drastic escalation in tensions with Iran. They also flagged the possibility of enough supply buffers in the market, especially from the Organization of Petroleum Exporting Countries, to offset supply disruptions in the Middle East.
The OPEC kept production unchanged during a meeting last week, and also reiterated plans to begin increasing production from December.
Demand cues, interest rates remain in focus
Oil markets remained focused on more cues on demand, especially after top importer China announced a slew of stimulus measures over the past few weeks.
Positive U.S. labor market data also helped spur some optimism over demand in the world’s biggest fuel consumer. But the reading sparked sharp gains in the dollar, which in turn weighed on crude prices.
Focus this week is on more U.S. economic cues, with data due on Thursday.
