Oil prices increased on Monday, driven by mounting hopes that the US Federal Reserve (Fed) will lower interest rates and growing tension in the Middle East while recession fears in the US limited further price increases.
International benchmark Brent crude increased by 0.6% to $71.82 per barrel at 10.42 a.m. local time (0742 GMT), up from the previous session's close of $71.37.
US benchmark West Texas Intermediate (WTI) rose 0.6% to $68.07 per barrel after closing at $67.67 in the prior session.
Anticipation over the Fed's next move and its potential impact continues to influence oil prices.
US Federal Reserve Governor Christopher Waller said Friday the time has come to begin lowering interest rates and he is open to larger rate cuts.
'The collective set of economic data indicates to me that the labor market and the economy are performing in a solid manner and the prospects for continued growth and job creation are good, with inflation near 2%,' Waller said.
'If the data supports cuts at consecutive meetings, then I believe it will be appropriate to cut at consecutive meetings,' he added.
The forecast that the Fed will cut interest rates by 25 basis points this month and by 100 basis points by the end of the year remains strong. The interest rate cut in the country is predicted to cause the US dollar to depreciate against other currencies, making oil cheaper and increasing oil demand.
Also, concerns that the ongoing conflicts in the Middle East will spread to a wider area and disrupt global oil supply supported upward price movements.
The Yemeni Houthi group announced Saturday that it shot down an American drone carrying out 'hostile activities' in central Yemen.
Houthi military spokesman Yahya Sarea said Yemeni air defenses 'succeeded' in shooting down the American MQ-9 drone above Marib province. Sarea confirmed that Houthi forces continue to fulfill their duties 'in support of the Palestinian people's suffering and defense of Yemen.'
Meanwhile, the data released in the US increased recession concerns in the world's biggest oil-consuming country, limiting the rise in oil prices by reducing market players' demand appetite.
The US economy added 142,000 jobs in August, fewer than estimates of 164,000 employment growth, according to figures released by the Labor Department on Friday. The number of new jobs added in July was similarly reduced by 25,000, from 114,000 to 89,000.
Analysts believe the unexpected increase in the unemployment rate last month as well as employment data, which was below expectations this month, triggered recession fears and reduced risk appetite in the country.
Experts now look to inflation data, due later in the week, to provide more information about the size of the expected rate cut at the Federal Open Market Committee (FOMC) meeting on Sept. 17-18.
By Duygu Alhan
Anadolu Agency
energy@aa.com.tr