Oil Prices Fall Amid Volatile Trade

By Erwin Seba

HOUSTON (Reuters) – Oil prices fell in volatile trading on Monday as global stock markets continued their selloff. However, fears of Iran’s retaliation for the assassination of a Hamas leader in Tehran limited the decline, as it may lead to a broader conflict in the Middle East.

Brent crude futures settled down 51 cents, or 0.66%, at $76.30 a barrel, trading earlier at their lowest levels since January. U.S. West Texas Intermediate crude fell by 58 cents, or 0.79%, to $72.94.

Equity markets tumbled from Asia to North America as investors fled riskier assets and anticipated rapid interest rate cuts by the Federal Reserve to bolster U.S. economic growth.

Phil Flynn, senior analyst with Price Futures Group, noted that the stock market decline was influenced by a jobs report that suggested the Fed might be falling behind the curve.

Concerns about potential supply disruptions from a wider Middle East conflict helped to limit oil’s losses throughout the day. Israel and the U.S. are preparing for escalation after Iran, Hamas, and Hezbollah pledged to retaliate against Israel for the recent killings of Hamas leader Ismail Haniyeh and a top Hezbollah military commander.

Oil traders expect Iran’s response to be quick, making crude futures susceptible to recession fears that roiled markets on Monday. John Kilduff, founding partner of Again Capital LLC, warned that if tensions ease quickly, crude prices could be negatively impacted.

Slumps in diesel consumption in China, the world’s largest contributor to oil demand growth, are also weighing on oil prices.