In response to support from Middle East turmoil, oil prices fell more than 1% on Monday as investors exercised caution ahead of this week’s Chinese manufacturing data and a U.S. Federal Reserve policy meeting.
By 07:18 GMT, U.S. West Texas Intermediate crude was down 1.3%, or $1.13, at $84.41 a barrel, while Brent crude futures were down 1%, or 97 cents, to $89.51 a barrel.
“The ground invasion was widely expected, despite an escalation in the Hamas-Israel war,” Tina Teng, an analyst with CMC Markets, stated.
“The weekend playout signals no further expansion into a wider regional war, which caused a retreat in oil prices.”
Due to Israel’s increased ground incursions into Gaza, which heightened concerns that the war may spread in an area that produces one-third of the world’s oil, both Brent and WTI closed Friday’s trading session up 3%.
Investors are looking for any indications of an economic slowdown that would impact gasoline consumption in the world’s largest oil consumer. These indicators include the conclusion of Wednesday’s U.S. Fed meeting, U.S. jobs data, and earnings from tech giant Apple Inc. (AAPL.O).
It is broadly anticipated that the Federal Reserve will maintain current interest rates, and the central banks of Japan and Britain will also likely examine their policies.
This week, China will release its manufacturing and services PMIs for October. Investors will be watching for more indications that, as a result of Beijing’s encouraging actions, the economy of the largest crude importer in the world is stabilizing and fuel demand is increasing.
Prices are volatile, and investors are on edge due to events in the Middle East; last week saw Brent and WTI fall for the first time in three weeks.
But over the weekend, I demonstrated that there is still just a violent war between Israel and Gaza, according to Vandana Hari, founder of the oil market monitoring company Vanda Insights. “Under that context, crude appears overpriced. I anticipate that it will keep falling.
As Israeli forces supported by tanks pushed into the enclave with a ground assault on Monday, Palestinians in northern Gaza reported heavy artillery and airstrikes, prompting further international demands to protect civilians.
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