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Crude oil recouped a sliver of last week’s heavy losses, as the Middle East risk premium returned to the market with Israel preparing for a military offensive in Gaza’s southernmost city of Rafah, where hundreds of thousands of civilians have taken refuge.
Oil prices bounced higher and then retreated throughout Monday’s trading on prospects for a ceasefire in Gaza before Israel said a ceasefire proposal that Hamas had accepted contained “significant gaps.”
“Optimism regarding a ceasefire between Israel and Hamas had been building over the last week or so, and that was reflected in last week’s steep drop in oil futures prices,” Sevens Report Research co-editor Tyler Richey told MarketWatch.
Gains were also supported by Saudi Aramco raising its official selling prices for June, which analysts saw as a possible indicator of maintaining production cuts beyond Q2.
The Saudi increases likely are “paving the way for some bullish global oil demand forecasts out of next week’s monthly OPEC report,” and Saudi Aramco could be setting the stage for an extension of production cuts at the next formal meeting, Ritterbusch.
Crude is up “on a combination of renewed Middle East concerns adding some premium back to prices and Saudi signaling robust demand after hiking prices to Asia,” Saxo Bank’s head of commodity strategy Ole Hansen says.
Front-month Nymex crude (CL1:COM) for June delivery settled +0.4% to $78.48/bbl, snapping a five-session losing streak, while front-month July Brent crude (CO1:COM) ended +0.4% to $83.33/bbl, its second gain in three sessions.
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“Positive signs” were reflected by the Chinese service sector and investor sentiment in the Eurozone, which helps lift prospects for energy demand, Samer Hasn, market analyst at XS.com, said according to MarketWatch.
The Caixin services purchasing managers index slipped to 52.5 in April from 52.7 in March, but the index has stayed in expansion territory for 16 months, The Wall Street Journal says, and the eurozone Sentix Investor Confidence index rose to -3.6 in May from -5.9 in April, the best reading since February 2022, according to Oanda.
