Oil prices rose on Monday, buoyed by strong factory activity in China, the world’s second-largest oil consumer, and escalating tensions in the Middle East, where Israel resumed attacks on Lebanon despite a ceasefire agreement. Brent crude futures increased by 75 cents, or 1.04%, reaching $72.59 a barrel by 10:02 GMT. Meanwhile, U.S. West Texas Intermediate crude rose 70 cents, or 1.03%, to $68.70 a barrel.
Giovanni Staunovo, an analyst with UBS, noted, “The better-than-expected economic data from China is supporting crude prices, as oil prices had been adversely affected by concerns over Chinese demand.”
He added that stimulus measures are beginning to positively impact economic activity, which should help boost Chinese oil demand in the coming months. A private-sector survey indicated that China’s factory activity expanded at its fastest pace in five months in November, increasing optimism among Chinese firms just as U.S. President-elect Donald Trump intensifies his trade threats.
However, traders are closely monitoring developments in Syria, considering the potential for widened tensions across the Middle East, according to Yeap Jun Rong, a market strategist at IG. A truce between Israel and Lebanon took effect on Wednesday, yet each side accused the other of violating the ceasefire. The Lebanese health ministry reported several injuries from two Israeli strikes in southern Lebanon, while airstrikes increased in Syria, where President Bashar al-Assad vowed to eliminate insurgents in Aleppo.
Last week, both benchmarks fell more than 3% due to eased supply concerns stemming from the Israel-Hezbollah conflict and predictions of a surplus in 2025, even in light of expected prolonged output cuts. For Shakirah Fatomide, her phone serves as her only source of light during one of Nigeria’s frequent power outages.
The Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, postponed their meeting to December 5 and are discussing the possibility of delaying a planned oil output increase set to begin in January, OPEC+ sources told Reuters last week. This week’s meeting will determine the policy for the early months of 2025. Given that the group’s production increase had been widely anticipated, the market’s focus may shift to the extent of any delays and their impact on crude prices, according to Tony Sycamore, a market analyst based in Sydney with IG.
“Money managers are hesitating… the market is seeking clarity on the implications of the upcoming Trump administration and OPEC+ supply policy as the group meets,” said Harry Tchilinguirian, head of research at Onyx Capital Group. A recent Reuters monthly oil price poll indicated that Brent is expected to average $74.53 per barrel in 2025.