first round in France
London (awp/afp) – Oil prices were trading positively on Monday, driven by escalating tensions in the Middle East and prospects of more robust Chinese demand, but also by the rise of the euro against the dollar after the first round of legislative elections in France.
At around 10:15 GMT (12:15 CET), the price of a barrel of North Sea Brent crude for delivery in September, which is the first day of use as a reference contract, gained 0.28% to 85.24 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in August, rose 0.25% to 81.74 dollars.
Oil is “driven by escalating tensions between Israel and Hezbollah and a strong Chinese manufacturing PMI,” DNB analysts summarized.
Nearly nine months after the start of the war, sparked by an unprecedented Hamas attack on Israel on October 7, Israel struck the southern Gaza Strip on Monday after Palestinian fighters fired 20 rockets against its territory.
This war also raises fears of a conflict between Israel and the Lebanese Hezbollah after an increase in attacks on both sides of the Israeli-Lebanese border.
Manufacturing activity in China, the world’s largest importer of oil, for its part experienced its strongest growth in three years in June, according to an independent index published Monday.
“In addition, Hurricane Beryl (category 4), described by forecasters as ‘extremely dangerous’, is expected to cause enormous damage today” in the Caribbean, and although it should spare oil and gas operations in the Gulf of Mexico, “he reminds that forecasters are expecting an active hurricane season”, according to DNB.
In addition, “the markets are breathing a little sigh of relief” after the results of the first round of the legislative elections in France, which is boosting the euro and reciprocally weighing on the dollar, a phenomenon likely to fuel oil purchases, indicates John Evans, analyst at PVM Energy.
When the dollar falls, this in fact reduces oil bills which are exchanged in the American currency, which tends to push up the price of a barrel.
Markets believe that the results of the first round of the French legislative elections reduce the probability that the National Rally will obtain an absolute majority in the National Assembly, which is seen as the “least worst scenario”, comments John Plassard, specialist for Mirabaud.
The National Rally came out on top with over 33% of the vote, slightly below the latest polls. The New Popular Front reached nearly 28% and the presidential camp 20%.
ode/at/pta
