Investing.com– Oil prices fell in Asian trading on Monday, retreating after a flare-up in tensions in the Middle East triggered their biggest weekly rise in more than a year, with focus on the long-running war between Israel and Hamas.
Positive U.S. jobs data also contributed to oil’s rise last week, as investors bet the economy was more resilient than initially feared. But oil prices suffered some profit-taking on Monday.
The was down 0.5% at $77.64 per barrel, while the was down 0.5% at $73.32 per barrel as of 8:49 p.m. ET (00:49 GMT). Both contracts rose 8% to 10% last week.
However, trading volumes were somewhat limited due to the Golden Week holiday in China. Chinese markets are expected to reopen on Tuesday.
Supply disruptions ahead of first anniversary of Israel-Hamas war
Oil bulls banked on supply disruptions in the Middle East as the war between Israel and Hamas showed few signs of easing. Monday marked a year since a Hamas attack on Israel sparked a resumption of hostilities between the two countries.
On Monday, reports indicated that Hezbollah rockets hit Haifa, Israel’s third largest city.
Israel struck Hezbollah targets in Lebanon and the Gaza Strip on Sunday, days after Iran launched a large-scale missile attack on Israel due to its activities against Hezbollah and Hamas.
According to some reports, Israel is considering attacking Iran’s oil production facilities, which could disrupt oil supplies and mark a radical escalation in the conflict.
But ANZ analysts played down the potential impact of the Middle East conflict on supplies, saying they did not see a radical escalation in tensions with Iran. They also highlighted the possibility of sufficient buffer supply in the market, particularly from the Organization of the Petroleum Exporting Countries, to offset supply disruptions in the Middle East.
OPEC kept production unchanged at a meeting last week and also reiterated its intention to increase output from December.
Demand indices and interest rates remain in focus
Oil markets remained attentive to demand cues, particularly after top importer China announced a series of stimulus measures in recent weeks.
Positive U.S. labor market data also helped boost optimism about demand in the world’s largest fuel consumer. But the data led to a sharp rise in the dollar, which weighed on crude oil prices.
This week’s focus will be on other US economic indices, with data from the US due on Thursday.
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