(Bloomberg) -- Oil steadied following its biggest weekly gain since April as strength in the dollar offset fears that the conflict between Israel and Hezbollah could morph into a regional war.
Brent traded little changed, while West Texas Intermediate was near $71 a barrel. Weaker than expected economic data in Europe helped the dollar slightly, making commodities priced in the currency less appealing.
Hezbollah launched more than 100 rockets, missiles and drones toward northern Israel on Sunday, prompting counterattacks against the Iran-backed group in Lebanon. Concerns persist that the war will worsen, threatening oil output in a region that supplies about a third of the world’s barrels.
In China, the largest oil-importing nation, authorities announced plans for a rare briefing on the economy by financial regulators as the country cut a short-term policy rate. That fueled speculation officials are preparing more efforts to revive growth, after the US pivoted to lowering borrowing costs last week.
Optimism around US rate cuts has driven a 9% rally in Brent since it sank earlier this month. However, concerns of a worsening fuel demand outlook, which made hedge funds the most bearish on diesel on record, have kept gains in check.
“Sentiment among energy investors has turned decisively bearish as OPEC+ now plans to add barrels into a surplus oil market,” BofA analysts including Francisco Blanch wrote in a note. “We believe $60 a barrel is a soft price floor to our central Brent forecast of $75 a barrel for 2025 if downside risks play out.”
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--With assistance from Sarah Chen.
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