Crude Oil Prices Rise As Gaza Tensions Rise, Saudi Arabia Raises Prices | Business news

Oil futures rose on Monday after Saudi Arabia raised crude prices in June for most regions and as the prospect of a Gaza ceasefire deal appeared dim, renewing fears that the Israel-Hamas conflict could widen further into the key oil-producing region.

Brent crude futures gained 51 cents, or 0.6 percent, to $83.47 a barrel, while U.S. West Texas Intermediate crude futures were at $78.64 a barrel, up 53 cents or 0.7 percent.

Both futures posted their biggest weekly loss in three months last week, with Brent down more than 7% and WTI down 6.8% as investors weighed weak US jobs data and possible timing of a Federal Reserve interest rate cut.

The geopolitical risk premium on oil prices also fell as Gaza ceasefire talks got underway.

However, the prospects for a deal appeared dim on Sunday as Hamas reiterated its demand for an end to the war in exchange for the release of the hostages, which Israeli Prime Minister Benjamin Netanyahu categorically ruled out.

Festive offer

On Monday, the Israeli military asked Palestinian civilians to evacuate Rafah as part of a “limited action” operation, but did not immediately confirm media reports that it was part of preparation for a ground attack.

“News that Israel wants to continue and expand its operations in Rafah risks derailing a potential ceasefire agreement and reigniting geopolitical tensions in the Middle East that appeared to be easing,” said IG markets analyst Tony Sycamore.

With most long oil positions offset last week, the risks appear to be that WTI prices will return to $80 early in the week, he added.

Also bullish on prices, Saudi Arabia raised official selling prices (OSP) for crude oil sold to Asia, northwest Europe and the Mediterranean in June, signaling expectations of strong demand this summer.

“After falling just over 7.3% last week as geopolitical tensions eased, ICE Brent started the new trading week on a stronger footing, opening higher,” said Warren Patterson, head of commodity research at ING, in a note.

This comes after Saudi Arabia raised June PSOs for most regions amid supply tightening this quarter, he added.

In China, the world’s largest crude importer, services activity remained in expansion territory for a 16th consecutive month, while new order growth accelerated and business sentiment rose solidly, raising hopes of a sustained economic recoveries.

In a sign that supply could be tightening, U.S. energy companies cut the number of oil and natural gas rigs operating for the second week in a row last week. Oil rigs fell seven to 499 in their biggest weekly decline since November 2023, Baker Hughes said in a report on Friday.

First uploaded on: 06-05-2024 at 12:47 IST

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