By Arunima Kumar
(Reuters) -Oil prices rose more than 1% on Monday, supported by strong factory activity in China and escalating tensions in the Middle East, where Israel resumed attacks on Lebanon despite a ceasefire deal.
futures climbed 91 cents, or 1.27%, to $72.75 a barrel by 1357 GMT while U.S. West Texas Intermediate crude rose 97 cents, or 1.43%, to $68.97.
“The better than expected economic data from China is supporting crude prices, as so far oil prices have been suffering from Chinese demand concerns,” said UBS analyst Giovanni Staunovo.
Stimulus measures are starting to finally affect economic activity, which should help to boost Chinese oil demand over the coming months, he added.
A private sector survey showed China’s factory activity expanded at the fastest pace in five months in November, boosting Chinese business optimism just as U.S. President-elect Donald Trump ramps up his trade threats.
Traders are also watching developments in Syria, weighing whether recent escalation could widen tensions across the Middle East, said IG market strategist Yeap Jun Rong.
A ceasefire between Israel and Lebanon, which took effect last Wednesday, appeared increasingly fragile. Lebanese authorities said that at least two people were killed on Monday in Israeli strikes on southern Lebanon. Meanwhile, airstrikes intensified in Syria as President Bashar al-Assad vowed to crush insurgents in Aleppo.
Both crude benchmarks fell more than 3% last week, pressured by easing supply concerns from the Israel-Hezbollah conflict and 2025 surplus forecasts, despite expected sustained output cuts.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, postponed the group’s next meeting to Dec. 5. It will discuss delaying a planned oil output increase scheduled to start in January, OPEC+ sources told Reuters last week.
“Attention will be on the potential delay of the planned production hike, as an indefinite delay could alleviate downward pressure on prices,” said George Pavel, general manager at Naga.com Middle East.
This week’s meeting will decide policy for the early months of 2025.
“Money managers are sitting on the fence … the market is looking for clarity between the implication of the forthcoming Trump administration and OPEC+ supply policy,” said Harry Tchilinguirian at Onyx Capital Group.
