Oil prices edged lower in early Asian trade on Monday, with worries on Middle Eastern crude supply slightly abating after the Israeli military said they have ‘concluded’ a ‘series of strikes’ in southern Gaza.
Global benchmark Brent crude oil futures fell 0.41% to $81.85 per barrel, while the US West Texas Intermediate crude futures dropped 0.40% to $76.53 per barrel.
Oil prices posted around a 6% gain in the previous week as geopolitical risks persisted, with ongoing concerns over a broader spat between Israel and Palestine and the prospect of supply disruptions in the Middle East.
The Israeli military confirmed that it had performed intensive attacks in the Gazan city of Rafah, revealing no further information on the move. The assault came days after Israeli Prime Minister Benjamin Netanyahu declined Hamas’s ceasefire deal.
US Provides Slight Relief, Demand Concerns Remain
Oil supply worries in the Middle East stayed high, although output developments in the US provided some relief.
Data from US energy company Baker Hughes Co. showed on Friday that energy firms in the country added oil and natural gas for the third time in four weeks.
Oil and gas rig count, an early gauge of future production, increased by 4 to 623 in the week to February 9, marking its highest since mid-December 2023 and possibly pointing to an output surge. US crude production bounced back the week earlier to 13.3 million barrels per day (bpd).
Still, the latest rise remained 138 rigs short or 18% lower from last year, according to Baker Hughes. Oil rigs were steady at 499 last week, while gas rigs gained 4 to 121, their highest since September.
Concerns over oil demand also lingered following Cleveland Federal Reserve President Loretta Mester’s statement about the central bank’s current policy being in a ‘good place’ and that there was no indication they should rush rate cuts, reiterating the need to decrease inflation further.
The demand for crude weakens as higher interest rates curb an economy’s growth momentum.