By Shariq Khan
NEW YORK (Reuters) -Oil prices rose about a dollar a barrel on Monday on concerns that tensions in the Middle East and the ongoing war between Russia and Ukraine could curb global supplies.
Brent crude futures rose 89 cents, or 1.2%, to $78.22 a barrel by 1:53 p.m. ET (1853 GMT) and U.S. West Texas Intermediate crude futures rose 86 cents, or 1.2%, to $73.14 a barrel.
Traders have been closely following the situation in the Middle East, where progress on ceasefire negotiations between Israel and Hamas appeared elusive, indicating tensions in the oil-producing region are set to linger.
The United States also continued its campaign against Houthis in Yemen, whose attacks on shipping vessels have disrupted global oil trading routes, although supply has been largely unaffected.
In Russia, two Ukrainian attack drones struck the largest oil refinery in the country’s south on Saturday, a source in Kyiv told Reuters, the latest in a series of long-range attacks on Russian oil facilities which has reduced Russia’s exports of naphtha, a petrochemical feedstock.
“These attacks on Russian oil supplies are starting to take a toll,” said John Kilduff, partner at New York-based Again Capital LLC.
Monday’s gains come after oil prices slumped 7% in the previous week on concerns about weak economic activity in China and fading hopes of imminent interest rate cuts in the U.S.
“There is only so much this market can discount before you have to say that we are not pricing in the geopolitical risk accurately,” Kilduff added.
Limiting oil’s gains, data on Monday showed U.S. services sector growth picked up in January, dampening hopes of rate cuts even more and pushing the U.S. dollar to its highest in almost three months against other major currencies.
A stronger greenback lowers demand for dollar-denominated oil from investors holding other currencies.
(Reporting by Shariq Khan, Noah Browning, Florence Tan and Colleen Howe in Beijing; Editing by Chizu Nomiyama, David Evans, Ros Russell and Cynthia Osterman)
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