Fighting in Lebanon Supports Brent Amid Demand Concerns
Brent Crude Oil made a small recovery on Monday morning after trading around $109 last week amid concerns about the demand for oil in a lagging global economy. Brent traded at 110.61 on Monday morning, supported by the ongoing tension in the Middle East.
As fighting in Syria continues, the entire region has become quite unstable and Reuters reported on Monday that neighboring countries like Lebanon were facing civil unrest and violence as well. At a funeral for the assassinated Lebanese intelligence chief, angry citizens turned violent and stormed Prime Minister Najib Mikati's offices which resulted in gunfire exchanges.
Violence in Gaza also contributed to the uneasiness in the region, as Israeli officers killed two Palestinian militants and sparked further conflict with the Hamas movement. Many fear the growing political tension in the region could result in a supply interruption in the oil from Northern Iraq.
While the instability of the Middle East supported prices, the concern for demand remains very real. Many forecast that even with interruptions in the Middle Eastern oil supply, Saudi oil and oil stockpiles will more than satisfy the weakening demand. Some analysts are forecasting Brent to drop as low as $100 per barrel, even amid the potential problems in the Middle East.
The world's top oil consumer, the U.S., has released employment and housing data that paints a positive picture for the future of its economy; but China's sluggish economy and Europe's ongoing struggle with debt outweighs any positive gains in the US.
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