Shafaq News/ Oil prices extendedgains on Monday on fears a major spillover in fighting from the Gaza conflictinto the Middle East could disrupt regional oil supplies, while imminent USinterest rate cuts lifted the global economic and fuel demand outlook.
Brent crude futures climbed 53cents, or 0.7%, to $79.55 a barrel by 0425 GMT while US crude futures were at$75.34 a barrel, up 51 cents, or 0.7%.
In one of the biggest clashes inmore than 10 months of border warfare, Hezbollah fired hundreds of rockets anddrones into Israel on Sunday, as Israel's military said it struck Lebanon witharound 100 jets to thwart a larger attack.
The clash raises fears the Gazaconflict risks morphing into a regional conflagration drawing in Hezbollah'sbacker Iran and Israel's main ally the United States.
"Geopolitical risk factors willlikely influence the oil market significantly," said Kelvin Wong, a seniormarket analyst at OANDA in Singapore.
"Increased odds of atit-for-tat retaliation attack by Hezbollah and Iran in response to Israel'spre-emptive strike on Hezbollah sites in Southern Lebanon may keep WTI crudesupported."
Both oil benchmarks gained more than2% on Friday after US Federal Reserve Chair Jerome Powell endorsed an imminentstart to interest rate cuts.
"The prospect of easingmonetary policy boosted sentiment across the commodity complex," ANZanalysts said in a note, adding it expects the Fed will implement a progressiveseries of rate cuts.
Still, oil prices were down lastweek as a poor outlook for major economies weighed on fuel demand, the bankadded.
Oil traders also remain cautiousover the actions of the Organization of Petroleum Exporting Countries (OPEC)and its allies, or OPEC+, which has plans to raise output later this year, saidPriyanka Sachdeva, senior market analyst at Phillip Nova.
"The cartel had recentlytrimmed its outlook for global oil demand, citing concerns over weak demand intop oil importer China," she said.
"Current robust US demand andrefilling of SPR reserve look as the only support for oil prices against therisk of excess OPEC supply," she added, referring to the US StrategicPetroleum Reserve (SPR).
The US Energy Department said onFriday it bought nearly 2.5 million barrels of oil to help replenish the SPR.
The number of operating US oil rigswere unchanged at 483 last week, Baker Hughes said in its weekly report.
(Reuters)