Oil prices rise on Middle East concerns, rate cut cheer

Oil prices rose in Asian trade on Monday as increased tensions in the Middle East saw traders attach a bigger risk premium, while the prospect of lower interest rates pushed up hopes that demand will improve. 

Crude prices were sitting on a two-week rebound from near three-year lows, as supply disruptions in the wake of Hurricane Francine also pointed to tighter markets.

Brent oil futures expiring in November rose 0.5% to $74.83 a barrel, while West Texas Intermediate crude futures rose 0.4% to $70.41 a barrel by 21:30 ET (01:30 GMT). 

Fed rate cut boosts oil, more economic cues awaited 

Oil prices rose after the Federal Reserve cut interest rates sharply last week and announced the start of an easing cycle.

The move pushed up hopes that lower rates will foster economic growth in the coming months, in turn helping spur increased crude demand. 

More cues on the Fed are due this week, with a string of officials- most notably Chair Jerome Powell- set to speak in the coming days. The Fed’s preferred inflation gauge- PCE price index data- is also due on Friday. 

Beyond the Fed, the Swiss National Bank and the Swedish central bank are set to meet this week, with both banks likely to cut interest rates. 

Middle East tensions remain in play 

Traders were seen attaching a risk premium to oil prices amid few signs of receding tensions in the Middle East. 

Israel continued to carry out strikes in Gaza and Lebanon, keeping concerns of an all-out war in the region largely in play. Hezbollah had recently vowed retaliation against Israel after the country allegedly detonated several electronic devices used by the Lebanese group. 

The constant fighting and threats of war pushed up concerns that a bigger conflict in the Middle East will disrupt supplies in the oil-rich region, tightening global markets.