Oil Prices Fall After Middle East Tensions Spark Weekly Gain By Investing.com

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 more than a year, focusing squarely on the long-running war Israel-Hamas.

Some positive US payrolls data also helped oil rally last week on bets that the economy was more resilient than initially feared. But oil prices were hit by some gains on Monday.

which expires in December was down 0.5% at $77.64 a barrel, while it was down 0.5% at $73.32 a barrel by 20:49 ET (00:49 GMT ). Both contracts rose between 8% and 10% last week.

However, trading volumes were somewhat limited due to the Chinese Golden Week holidays. Chinese markets are due to reopen on Tuesday.

The supply cut is centered on the 1-year anniversary of the Israel-Hamas war

Oil bulls rallied on bets on supply disruptions in the Middle East as the Israel-Hamas war showed little sign of cooling. Monday marked one year since a Hamas attack on Israel sparked renewed hostilities between the two.

Reports on Monday said Hezbollah rockets hit Israel’s third-largest city, 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 sharp escalation in the conflict.

But analysts at ANZ downplayed the potential impact of the Middle East conflict on supplies, saying they did not see a drastic escalation in tensions with Iran. They also signaled the possibility of sufficient supply buffers in the market, particularly from the Organization of the Petroleum Exporting Countries, to offset supply disruptions from the Middle East.

OPEC kept output unchanged during a meeting last week and also reiterated plans to start raising output from December.

Demand indicates interest rates remain in focus

Oil markets remained focused on several demand cues, especially after top importer China announced a series of stimulus measures over the past few weeks.

Positive US labor market data also helped fuel some optimism about demand in the world’s biggest fuel consumer. But the reading triggered strong gains in the dollar, which in turn weighed on crude oil prices.

This week the focus is on several US economic indicators, with data due on Thursday.