Oil prices cross $80 over Mideast tensions
Published: 05:10 AM,Oct 08,2024 | EDITED : 09:10 AM,Oct 08,2024
A worker stands in front of storage tanks at a oil refinery
Oil rose above $80 a barrel Monday on Middle East tensions while equities slid in New York as political and interest rate concerns dented the recent rally.
Oman crude closed at $78.16 on Monday while the Brent North Sea crude, the international benchmark oil contract, went above $80 per barrel for the first time since late August.
Oil futures have experienced recent volatility, with Brent slumping under $70 last month on concerns about weak demand before intensified fighting in the Middle East sent prices soaring 10 percent last week. Israel is preparing its retaliation against Iran over its missile attack last week, raising fears of a regional war that could involve strikes on oil facilities.
Beyond Middle East tensions, oil is also supported by hopes of stronger Chinese demand after Beijing recently announced major stimulus measures to boost its flagging economy. Offsetting price support is an expectation in the market that the OPEC+ group of oil-producing nations could reverse output cuts, according to analysts.
- 'Wild ride'
'The oil market is on a wild ride, caught in a whirlwind of geopolitical tension, OPEC+ strategy shifts, and a slowdown from its biggest customer, China,' said independent analyst Stephen Innes. Rising oil prices played a role in Wall Street's pullback. All three major indices fell about one percent or more.
'Wall Street is on a four-week win streak but (is) under pressure from rising yields, a rally in crude oil, and a strong dollar amid geopolitical and inflation concerns,' said Joe Mazzola, a strategist at Charles Schwab.
European shares closed mixed with Frankfurt slipping and London and Paris gaining. Major indices in New York retreated from gains made on Friday when a stronger-than-expected nonfarm jobs report showed the world's largest economy is in good shape but clouded the outlook for further interest rate cuts from the Federal Reserve. The figures led to 'a sharp re-evaluation in the market's forecasts for future Fed rate cuts,' said David Morrison, senior market analyst at Trade Nation. Wall Street investors are now betting on a quarter-point interest rate cut by the US Federal Reserve, rather than a repeat of the aggressive 50-basis point cut made last month. US inflation data due later this week will be closely watched for further clues on the Fed's thinking heading into its next policy-setting meeting.
Oman crude closed at $78.16 on Monday while the Brent North Sea crude, the international benchmark oil contract, went above $80 per barrel for the first time since late August.
Oil futures have experienced recent volatility, with Brent slumping under $70 last month on concerns about weak demand before intensified fighting in the Middle East sent prices soaring 10 percent last week. Israel is preparing its retaliation against Iran over its missile attack last week, raising fears of a regional war that could involve strikes on oil facilities.
Beyond Middle East tensions, oil is also supported by hopes of stronger Chinese demand after Beijing recently announced major stimulus measures to boost its flagging economy. Offsetting price support is an expectation in the market that the OPEC+ group of oil-producing nations could reverse output cuts, according to analysts.
- 'Wild ride'
'The oil market is on a wild ride, caught in a whirlwind of geopolitical tension, OPEC+ strategy shifts, and a slowdown from its biggest customer, China,' said independent analyst Stephen Innes. Rising oil prices played a role in Wall Street's pullback. All three major indices fell about one percent or more.
'Wall Street is on a four-week win streak but (is) under pressure from rising yields, a rally in crude oil, and a strong dollar amid geopolitical and inflation concerns,' said Joe Mazzola, a strategist at Charles Schwab.
European shares closed mixed with Frankfurt slipping and London and Paris gaining. Major indices in New York retreated from gains made on Friday when a stronger-than-expected nonfarm jobs report showed the world's largest economy is in good shape but clouded the outlook for further interest rate cuts from the Federal Reserve. The figures led to 'a sharp re-evaluation in the market's forecasts for future Fed rate cuts,' said David Morrison, senior market analyst at Trade Nation. Wall Street investors are now betting on a quarter-point interest rate cut by the US Federal Reserve, rather than a repeat of the aggressive 50-basis point cut made last month. US inflation data due later this week will be closely watched for further clues on the Fed's thinking heading into its next policy-setting meeting.