Oil held near a five-month high, with heightened geopolitical risks in the Middle East and tighter supply from Mexico helping to buoy prices.
Brent futures climbed toward $88 a barrel after rising by 0.5% on Monday, with West Texas Intermediate around $84. An Israeli airstrike on Iran’s embassy in Syria killed a top military commander and others, with Tehran saying it would respond decisively. Pemex, Mexico’s state-run oil company, said it plans to halt exports primarily of its Maya crude over the next few months.
Hedge funds are becoming increasingly bullish on crude, with money managers’ net-long positions on global benchmark Brent at a 13-month high, according to data from ICE Futures Europe. Open interest for the contract has also recovered to around the highest since late 2021.
Crude has climbed 14% this year as production cuts by the Organization of the Petroleum Exporting Countries and its allies offset rising supply from outside the group. OPEC+ is expected to affirm its current output policy at a review meeting scheduled for Wednesday, which would lead to a deficit through the end of the year, according to BloombergNEF.
The focus on supplies helped oil on Monday shake off data showing robust US manufacturing activity, which saw bond traders price in less monetary-policy easing by the Federal Reserve this year and a gauge of the dollar rise to a two-month high. Higher interest rates and a stronger greenback are normally bearish for commodities.
