Oil prices lost more than 1 percent on Monday, following a 3 percent gain on Friday, as investors adopted caution ahead of this week’s U.S. Federal Reserve meeting and other indications of global economic health.
Crude oil rose 3 percent on Friday after Israel stepped up ground operations in Gaza, raising concerns that the conflict could expand in the region, which accounts for a third of global oil production. However, that concern subsided on Monday.
Market users tend to be cautious towards the weekends. The early hours of Monday morning’s openings showed no confirmation of fears of the conflict spreading.
Brent crude futures were down $1.39, or 1.5%, to $89.09 a barrel as of 09:11 GMT, while West Texas Intermediate (WTI) crude was down $1.63, or 1.9%, to $83.91 a barrel.
A large-scale ground offensive was expected as the Hamas-Israeli war escalated. There was no sign of expansion into a wider regional war over the weekend, causing a decline in oil prices.
On Monday, Palestinians in northern Gaza reported heavy air and artillery strikes as Israeli troops backed by tanks pressed the area with a ground offensive; This has spurred further international calls to protect civilians.
Investors are focused on the Middle East as well as the outcome of Wednesday’s Federal Reserve meeting and what earnings from companies like tech giant Apple Inc. might indicate about expectations for an economic slowdown.
While the Fed is expected to keep interest rates unchanged, the central banks of England and Japan will also review their policies.
As China releases October manufacturing and services PMIs this week, investors await further signs that the economy of the world’s largest crude oil importer is stabilizing.
