Oil rises for fifth straight session on Mideast tensions and US data

Published : 2 months ago, on 12/08/2024

By Laila Kearney

NEW YORK (Reuters) -Oil prices were up by more than $1 a barrel on Monday, rising for a fifth consecutive session on intensifying Middle East supply risks and fading fears of a possible U.S. recession.

Brent crude futures were up $1.32, or 1.6%, at $80.98 a barrel by 1531 GMT. U.S. West Texas Intermediate crude futures rose $1.63, or 2.1%, to $78.47.

Iran and Hezbollah have vowed to retaliate for the assassinations of Hamas leader Ismail Haniyeh and Hezbollah military commander Fuad Shukr. An attack could widen the Middle Eastern conflict and tighten access to global crude supplies and boost prices.

In addition, Israeli forces continued with operations near the southern Gaza city of Khan Younis on Monday following an air strike over the weekend on a school compound that killed at least 90 people, according to the Gaza Civil Emergency Service. Israel said the death toll was inflated. Hamas cast doubt on its participation in new ceasefire talks on Sunday.

“We see higher prices this week that could advance the crude benchmarks further by around $3/bbl,” said oil analyst Jim Ritterbusch of Ritterbusch and Associates in Florida.

Brent gained 3.7% last week while WTI rose 4.5%, buoyed by stronger-than-expected U.S. jobs data that fed hopes for an interest rate cut in the world’s biggest consumer of crude oil.

“Support is coming from last week’s better than expected U.S. data, which eased fears of a U.S. recession,” said IG markets analyst Tony Sycamore.

Three U.S. central bankers said last week that inflation appeared to be cooling enough for the Federal Reserve to cut interest rates as soon as next month.

Rate cuts tend to improve economic activity, which increases the use of energy sources like oil.

Investors were looking ahead to U.S. consumer price index data for July on Wednesday, which is expected to show month-on-month inflation ticked up to 0.2% after a minus 0.1% reading in June.

Oil prices drew support when consumer prices in China, the biggest global importer of oil, rose faster than expected in July.

On Monday Russia evacuated civilians from parts of a second region next to Ukraine after Kyiv increased military activity near the border only days after its biggest incursion into sovereign Russian territory since the start of the war in 2022.

Undermining price support, OPEC cut its forecast for global oil demand growth in 2024, citing weaker than expected data for the first half of the year and softer expectations for China. It also trimmed its expectations for next year.

(Reporting by Laila Kearney in New York and Robert Harvey and Paul Carsten in London, Colleen Howe in Beijing and Florence Tan in SingaporeEditing by Jason Neely, David Goodman, David Evans and David Gregorio)