Oil prices saw an uptick on Monday, buoyed by stronger-than-expected factory activity in China, the world’s second-largest oil consumer, and the intensifying conflict in the Middle East, where Israel resumed strikes on Lebanon despite an ongoing ceasefire agreement.
Brent crude futures rose by 75 cents, or 1.04%, reaching $72.59 per barrel by 1002 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude added 70 cents, or 1.03%, to trade at $68.70 a barrel.
Giovanni Staunovo, an analyst at UBS, attributed the rise in oil prices to China’s better-than-expected economic data. “The stronger-than-anticipated factory activity in China is providing support for crude prices, as concerns over Chinese demand had been weighing on the market,” Staunovo explained.
Economic stimulus measures in China are beginning to yield results, which should boost oil demand in the coming months, he added. A private-sector survey revealed that China’s factory activity grew at its fastest pace in five months during November, contributing to improved optimism among Chinese businesses, just as U.S. President-elect Donald Trump intensifies his trade rhetoric.
Traders are also closely monitoring developments in Syria and Israel, with concerns that the conflict could further destabilize the region. Despite a truce taking effect between Israel and Lebanon on Wednesday, both parties have accused each other of violating the ceasefire agreement. The Lebanese health ministry reported multiple injuries following two Israeli airstrikes in southern Lebanon, while Israel’s airstrikes on Syria intensified after President Bashar al-Assad vowed to crush insurgents in Aleppo.
The ongoing tensions, combined with supply concerns, have added volatility to the market. Last week, both oil benchmarks fell over 3%, influenced by reduced concerns over supply disruptions caused by the Israel-Hezbollah conflict, as well as 2025 oil surplus forecasts. These declines occurred despite expectations of continued output cuts from major oil producers.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) have postponed their meeting to December 5, where they are expected to discuss a delay in a planned increase in oil production set for January. The outcome of this meeting will set policy for the early months of 2025.
The market had anticipated the production hike, so attention now shifts to how much of a delay will be implemented and whether that will affect crude prices, according to Tony Sycamore, market analyst at IG in Sydney. The delay in output increase could provide a buffer against rising supply concerns, potentially keeping oil prices supported through the start of 2025.
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