Investing.com – Oil prices fell on Monday, moving off the day’s lows as upbeat data on the US services sector eased concerns that the US economy is heading for a recession, while lingering supply concerns due to rising tensions in the Middle East also boosted sentiment.
At 1:35 PM ET (17:35 GMT), the price fell 0.6% to $76.40 per barrel, and was down 0.7% to $73.03 per barrel.
Oil prices are recovering from their lows as fears of a recession diminish
The crude oil market moved off session lows on Monday after data showing U.S. services activity in line with economists’ forecasts helped allay fears of an impending recession.
U.S. oil prices fell to their lowest level since February earlier in the day after Friday’s weaker jobs report sparked fears of a recession.
The prospect of a recession in the world’s largest fuel consumer does not bode well for future demand, even as recent inventory data showed that increased travel demand during the summer season had kept fuel consumption high.
“Investors see US seasonal demand broadly in line with long-term averages to date. Weaker US economic data did not help,” ANZ Research said in a recent note.
Weak economic signals from China have also been a major sore point in recent weeks, as gloomy data from the world’s biggest oil importer increased concerns about slowing demand.
“According to Bloomberg tracking data, Chinese road traffic experienced a seasonal decline for the third consecutive year,” ANZ added.
The fear of Israel and Hamas remains in play
Concerns about a conflict in the Middle East – which could disrupt oil supplies from the crude-rich region – came as Israel continued its offensive in Gaza.
Israel was also linked to the deaths of several senior Hamas and Hezbollah leaders last week, angering the groups and raising the threat of all-out war in the region.
This idea caused traders to attach some element of risk premium to oil prices, although it still did little to deter oil’s sharp decline in recent weeks.
Peace talks between Israel and Hamas appeared to have made little progress toward a ceasefire, even as the US called for de-escalation.
Tropical Storm Debby is approaching the Gulf Coast
Also of concern is upcoming Tropical Storm Debby, which is expected to quickly strengthen into a hurricane before making landfall on Florida’s Gulf Coast later in the session, the U.S. National Hurricane Center said Sunday.
Oil major Chevron (NYSE:) said on Sunday it had removed non-essential personnel from its Gulf of Mexico facilities, but that production had not yet been affected.
(Peter Nurse, Ambar Warrick contributed to this article.)
