ISLAMABAD -  Oil prices saw a modest increase on Monday, driven by optimism over demand recovery in China, the world's second-largest oil consumer, and heightened tensions in the Middle East as Israel continued military actions in Lebanon despite a cease-fire agreement.

As of 11:29 a.m. local time (0829 GMT), the international benchmark Brent crude rose by 0.11%, trading at $72.42 per barrel, up from the previous session's close of $72.34. Similarly, the US benchmark West Texas Intermediate (WTI) gained 0.06%, reaching $68.51 per barrel, compared to $68.47 at the end of the prior session.

The uptick in oil prices came amid encouraging economic data from China. The Caixin manufacturing Purchasing Managers' Index (PMI) for November exceeded expectations, registering at 51.5, signaling expansion in the country’s manufacturing sector. This followed the National Bureau of Statistics PMI, which showed a slight increase to 50.3 in November from 50.1 in October. These figures have spurred optimism about China's economic recovery, buoyed by ongoing support from Beijing.

Meanwhile, tensions in the Middle East contributed to concerns about oil supply disruptions. The Israeli army continued its attacks on Lebanon, violating the cease-fire agreement that had been in effect since November 27. The official Lebanese news agency NNA reported that Israeli forces opened fire on the town of Naqoura in southern Lebanon on Monday, marking the latest breach of the cease-fire. According to Anadolu Agency's tally, Israel committed 11 violations on Sunday alone, raising the total number of violations since the cease-fire's implementation to 73.

However, the strengthening US dollar is tempering the gains in crude oil prices. As the dollar remains firm in anticipation of potential US interest rate cuts, oil priced in dollars becomes more expensive for holders of other currencies, dampening global demand. The US dollar index, which tracks the greenback's value against a basket of other currencies, rose 0.5% to 106.350.

Looking ahead, market participants are awaiting a decision from the Organization of Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, on production policy for the first quarter of 2025. OPEC+ is set to meet on Thursday to assess the global supply and demand outlook.

Courtesy for information to Anadolu Agency