Oil prices edged higher on Monday, bolstered by robust factory activity in China, the world’s second-largest oil consumer, and rising tensions in the Middle East, where Israel resumed attacks on Lebanon despite a ceasefire agreement.
Brent crude futures climbed 75 cents, or 1.04%, to $72.59 per barrel by 1002 GMT, while U.S. West Texas Intermediate (WTI) crude rose 70 cents, or 1.03%, to $68.70 per barrel.
“Stronger-than-expected economic data from China is providing support to oil prices, which have been weighed down by concerns over Chinese demand,” said Giovanni Staunovo, an analyst at UBS. He noted that recent stimulus measures in China are beginning to boost economic activity, likely aiding oil demand in the months ahead.
A private-sector survey revealed that China’s factory activity expanded in November at its fastest pace in five months, lifting optimism among Chinese businesses even as U.S. President-elect Donald Trump intensifies his trade threats.
Meanwhile, traders remain focused on developments in Syria, assessing whether escalating tensions might spill over into broader conflict in the Middle East, according to Yeap Jun Rong, market strategist at IG.
A fragile truce between Israel and Lebanon took effect on Wednesday, but both sides have accused each other of violating the agreement. Lebanon’s health ministry reported multiple injuries from two Israeli strikes in southern Lebanon, while airstrikes in Syria intensified as President Bashar al-Assad vowed to crush insurgents in Aleppo.
Last week, both Brent and WTI benchmarks dropped more than 3%, as eased supply concerns related to the Israel-Hezbollah conflict and surplus forecasts for 2025 outweighed expectations of continued output cuts.
The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, have postponed their meeting to December 5 and are considering delaying a planned oil production increase initially set to begin in January, OPEC+ sources told Reuters last week.
The upcoming meeting will determine production policy for the early months of 2025.
With the production hike largely anticipated, market attention is expected to shift toward the length of the delay and its potential impact on crude prices, noted Tony Sycamore, a market analyst at IG in Sydney.
“Money managers remain cautious, waiting for clarity on how the incoming Trump administration and OPEC+ supply decisions will influence the market,” said Harry Tchilinguirian, head of research at Onyx Capital Group.
According to a Reuters monthly oil price poll released on Friday, Brent crude is projected to average $74.53 per barrel in 2025.
