Oil futures rose on Monday after Saudi Arabia hiked June crude prices for most regions and as the prospect of a quick agreement for a Gaza ceasefire deal appeared slim, reviving fears that combat between Hamas and Israeli forces will resume soon.
Brent crude futures were up 69 cents, or 0.84 per cent, at $83.65 a barrel at 11:15 CDT (1615 GMT), while U.S. West Texas Intermediate crude futures were at $78.89 a barrel, up 78 cents, or 1 per cent.
Last week, both futures contracts posted their steepest weekly loss in three months, with Brent falling more than 7 per cent and WTI down 6.8 per cent, as investors weighed weak U.S. jobs data and the possible timing of a Federal Reserve interest rate cut.
Prospects for a Gaza ceasefire faded as Hamas reiterated its demand for an end to the war in exchange for the freeing of hostages and Israel appeared poised to launch a long-threatened assault in the southern Gaza Strip.
On Monday, Israel’s military called on Palestinian civilians to evacuate Rafah as part of a “limited-scope” operation.
“Markets are a little jaded about geopolitical risk from the war,” said John Kilduff, partner with Again Capital. “I think you’re going to have to see more kinetic activity to move the markets,”
News that talks were continuing between Hamas and Israel despite failure to reach agreement over the weekend, also tempered market reactions on Monday, Kilduff said.
Also supporting oil was Saudi Arabia’s move to raise the official selling prices for its crude sold to Asia, Northwest Europe and the Mediterranean in June, signalling expectations of strong demand this summer.
In China, the world’s largest crude importer, services activity remained in expansionary territory for the 16th straight month, while growth in new orders accelerated and business sentiment rose solidly, boosting hopes of a sustained economic recovery.