Oil prices saw an increase on Monday, buoyed by strong factory performance in China and ongoing tensions in the Middle East. Brent crude futures rose by 0.79%, reaching $72.41 per barrel, while U.S. West Texas Intermediate crude climbed 0.85% to $68.58. Market strategist Yeap Jun Rong from IG noted that the stability in oil prices reflected a positive outlook for China’s manufacturing sector, aided by recent stimulus measures.
The growth in China’s factory activity, which expanded at the fastest rate in five months, contributed to a sense of optimism. This expansion came at a crucial time, as trade tensions between China and the U.S. continued to rise. Despite this, traders remained cautious, monitoring developments in Syria and the broader Middle East for any potential escalation.
Tensions in the region were heightened as Israel resumed strikes on Lebanon, despite a ceasefire agreement. The Lebanese health ministry reported casualties from Israeli airstrikes in southern Lebanon, while airstrikes also intensified in Syria. These events followed a truce between Israel and Lebanon that had only recently taken effect, with both sides accusing each other of violating the ceasefire.
Last week, oil prices faced a decline, driven by diminishing concerns over supply disruptions from the Israel-Hezbollah conflict and forecasts indicating a supply surplus in 2025. However, the Organisation of the Petroleum Exporting Countries (OPEC+) is expected to make decisions regarding output cuts in their upcoming meeting on December 5.
OPEC+ has delayed a decision on its planned production increase, which was initially scheduled for January. This delay has sparked speculation in the market, with some analysts suggesting that an indefinite delay could benefit oil prices. According to Tony Sycamore of IG, this delay would allow OPEC+ to better assess the potential impact of trade policies and China’s economic response. However, recent reports suggest that even modest delays have failed to significantly raise oil prices in line with OPEC+ expectations.
Challenger Energy Group plc (LON:CEG) is a Caribbean and Atlantic margin focused oil and gas company, with a range of petroleum assets located onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay.
