Written by Arathy Somasekar
HOUSTON (Reuters) – Oil prices rose on Monday as investors worried about supply after tensions in the Middle East and the development of a tropical disturbance in the Gulf of Mexico dented some production.
November futures were up 51 cents, or 0.6%, at $75 a barrel at 10:21 am ET (1421 GMT). November futures were up 65 cents, or 0.9%, at $71.65.
Israel struck hundreds of Hezbollah targets on Monday in airstrikes that Lebanese health authorities said killed at least 182 people, making it Lebanon's deadliest day in nearly a year of conflict between the Iran-backed militia group and Israel.
After nearly a year of war in Gaza, Israel has shifted its focus to its northern border, where Hezbollah has been firing rockets in support of its ally Hamas.
“More attacks from Israel in Lebanon are raising fears that Iran will become more involved, raising the prospect of oil exports being at risk,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Another threat to water availability was the tropical disturbance near the Gulf of Mexico. Shell (LON: ) said on Sunday it would shut down production at its Stones and Appomattox fields in the region as a precautionary measure.
Both oil benchmarks rose more than 4% last week, boosted by the US Federal Reserve's decision to cut interest rates by 50 basis points and signal further cuts by the end of the year.
The President of the Federal Reserve Bank of Chicago, Austan Goolsbee, said on Monday that he expects “a lot of rate cuts next year” as the US central bank seeks to stabilize the economy, where it controls inflation without affecting the labor market.
Keeping prices down, however, has been an unexpected and sharp drop in euro zone business this month as the bloc's leading services industry is shrinking while productivity declines are accelerating.
US business activity was steady in September, but the average prices charged for goods and services rose at the fastest pace in six months, possibly pointing to higher inflation in the coming months.
China, the world's top oil importer, is currently facing inflationary pressures, and is struggling to boost growth despite a series of policy measures aimed at encouraging domestic spending.
“Oil looks different despite the riskier asset price hike since the Fed's non-policy rates last week,” said Harry Tchilinguirian, head of research at Onyx Capital Group.
