Oil prices rose Monday, fueled by a growing feud between the U.S. and Saudi Arabia over a missing journalist, though tugging in the other direction were recent data showing sagging demand for the commodity.
November West Texas Intermediate crude CLX8, +0.59% rose 43 cents, or 0.68%, to $71.79 a barrel, after falling about 4% last week. Brent crude LCOZ8, +0.87% the global benchmark, gained 80 cents, or 1%, to $81.22 a barrel, after a 4.4% drop last week.
Last week’s losses for oil were linked to a two-day selloff across global stock markets, with questions over economic strength in the U.S. and globally, and eventual energy consumption. Stock futures were once again tilting lower on Monday, as Asian stocks generally sagged.
In an interview on Sunday, U.S. President Donald Trump threatened “severe punishment” if an investigation finds the kingdom in any way involved in the disappearance of dissident Saudi journalist Jamal Khashoggi, who was last seen entering the Saudi consulate in Istanbul on Oct. 2.
Firing back, Riyadh vowed even stronger retaliation against any moves from Washington, adding that the nation “plays an effective and active role in the global economy.” In addition, an editorial by Saudi-owned Al Arabiya channel’s general manager Turki Aldakhil on Sunday warned that any sanctions imposed on the country could push oil prices to $100, $200 or even double that amount.
Need to know: Don’t rule out $400 oil if U.S. sanctions Saudi Arabia
“Another geopolitical hot spot for the U.S. administration to navigate but this one extremely testy given that President Trump has been pressuring Saudi to up supply to counter the U.S.-led Iran oil sanction,” said Stephen Innes, head of trading in the Asia Pacific for OANDA, in a note to clients.
Meanwhile, international backlash against the Saudis over the missing journalist was ramping up, as Ford Motor Co. F, -1.93% Chairman Bill Ford and JPMorgan Chase & Co. JPM, JPM, -1.09% Chief Executive James Dimon became the latest big names to drop out of a major investment conference in Saudi Arabia.
Gains for oil were being kept in check by potential headwinds for prices, though. Last week’s International Energy Agency monthly report forecast lower global oil demand, citing potential knock-on effects from a U.S./China trade dispute. The Organization of the Petroleum Exporting Countries lowered its global oil demand growth forecast for demand this year and next, as it showed rising OPEC and Russian production.
That would more than make up for a continued decline in Iranian output ahead of the implementation of U.S. sanctions on Iran’s oil industry.
Hedge funds remained unconvinced about the bullish #oil narrative which in recent weeks drove the price to a four-year high. In the week to October 9 they sold both Brent and WTI for a second week as supply worries eased and demand concerns began receiving some attention. #OOTT pic.twitter.com/PHKNCabZKW
— Ole S Hansen (@Ole_S_Hansen) October 14, 2018
Data from Baker Hughes BHGE, +0.62% Friday showed that the number of active U.S. rigs drilling for oil, which offers a peek at output activity, climbed by 8 to 869 this week. That followed three straight weeks of declines and was the largest weekly increase since the week ended Aug. 10.
Across other energy products, November gasoline RBX8, +0.47% added 0.6% to $1.945 a gallon., while heating oil HOX8, +0.59% for the same month lost 0.9% to $2.341 a gallon. November natural gas NGX18, +0.89% jumped 1% to $3.194 per million British thermal units.
Read: Here’s what Trump’s ethanol plan means for farmers, refiners and motorists
— Myra Picache contributed to this article
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