ANN/THE STRAITS TIMES – Oil prices extended gains yesterday on fears a major spillover in fighting from the Gaza conflict into the Middle East could disrupt regional oil supplies, while imminent United States (US) interest rate cuts lifted the global economic and fuel demand outlook.
Brent crude futures climbed 37 US cents, or 0.5 per cent, to USD79.39 a barrel by 11pm GMT while US crude futures were at USD75.19 a barrel, up 36 US cents, or 0.5 per cent.
“Israel’s pre-emptive strike on Lebanon over the weekend to prevent an imminent attack from Hezbollah should ensure a stronger open this morning as (WTI) crude looks to extend its rally initially towards USD77.50, before USD80,” IG analyst Tony Sycamore said in a note.
Both oil benchmarks gained more than two per cent on August 23 after US Federal Reserve chairman Jerome Powell endorsed an imminent start to interest rate cuts.
“The prospect of easing monetary policy boosted sentiment across the commodity complex,” ANZ analysts said in a note, adding it expects the Fed will implement a progressive series of rate cuts.
Still, oil prices were down last week as a poor outlook for major economies weighed on fuel demand, the bank added.
The US Energy Department said on August 23 it bought nearly 2.5 million barrels of oil to help replenish the Strategic Petroleum Reserve.
