Prices of crude made a sharp increase late Monday after Yemeni militants staged a daring assault on a Saudi oil and gas plant that sent shockwaves across global oil trading floors and disrupted positive outlook by Wall Street observers.
But an increase in price were capped to some magnitude by surprisingly pessimistic report by the Oil Petroleum Exporting Countries (OPEC) that sparked worries about an increase in the demand for oil. Brent crude rallied 79 cents, or around 1.4 percent at $59.41 per barrel while US crude climbed 65 cents, or around 1.3 percent at $55.50 per barrel.
Oil was actually gaining momentum in terms of demand courtesy of a generally optimistic outlook that global markets will not see any catastrophic economic scenario and in the words of New York-based OANDA senior market analyst Edward Moya, Monday's drone attack served as a warning that geo-political chaos could erupt anytime in the Middle East.
Yemen's Houthi Group's latest act of terror caused a huge fire on a gas and oil facility in eastern Saudi Arabia, escalating an already fragile Middle East situation, but state-controlled Saudi Aramco disclosed that oil production suffered only minor damage.
As this developed, White House officials said economic deputies from Washington and Beijing are expected to meet again in ten days to iron out their trade differences and further move on to the next key phase in their trade relations economies around world are keeping a close tab on.
OPEC slashed its outlook for a hike in world oil demand this year by around 41,000 barrels a day, to 1.11 million BPDs and pointed out that the global market would experience a modest surplus next year.
Also putting a burden on oil prices, energy companies in the US also hiked the number of gas and oil pumping stations this week, the first time in as many days, despite plans by big producers to minimize their budget on new rigs this year.
Investors are also expected to look out for major manufacturing data set to be released this week from the US and London, Michael McCarthy, CMC chief market planner, disclosed over the weekend.
Meanwhile, in its cut-down export volume, however, Saudi Arabia has revamped key destinations for its oil products, bolstering sales in the globe's leading oil importing country -- China -- and decreasing shipments to the US, projections by vessel tracking information, China's Customs Data, and EIA revealed.
