Crude rose 3% on Friday after Israel intensified ground incursions into Gaza, stoking fears that the conflict would spread in a region that accounts for a third of global oil production. However, according to analysts, this concern faded on Monday.
“The war premium has exited the market,” said Phil Flynn, an analyst at Price Futures Group. “It’s a situation where over the weekend the war seemed to escalate, but there doesn’t appear to be any disruption to supply.”
Israeli troops and tanks attacked the main northern Gaza city from the east and west on Monday, three days after ground operations began in the Palestinian enclave.
In addition to the Middle East, investors are awaiting the outcome of the Fed’s meeting on Wednesday, as well as what results from companies such as technology giant Apple may indicate about the prospects for an economic slowdown.
The market expects the Fed to keep interest rates unchanged, while the central banks of England and Japan will also review their policies.
Meanwhile, German inflation declined in October, pointing to a substantial cooling of headline inflation in the euro area.
In addition, China publishes its manufacturing and services PMIs for October this week, and investors are awaiting new signs of stabilization of the economy of the world’s largest importer of crude oil.