Oil futures: Prices slide amid Middle East diplomacy hopes

Quantum Commodity Intelligence – Crude oil futures Monday were lower on hopes that diplomatic efforts could defuse the conflict in the Middle East, while Israel continued to delay its expected ground offensive in Gaza.

Front-month Dec23 ICE Brent futures were trading at $89.85b (1825 GMT), close to the day's low of $89.62/b and compared to Friday's settle of $92.16/b.

At the same time, Dec23 NYMEX WTI was trading $85.54/b versus Friday's settle of $88.08/b.

The US was reportedly advising Israel to hold off on ground invasion in hopes of negotiating the release of more hostages held by Hamas in Gaza, while two elderly abductees were rumoured to have been released late Monday.

Prices had eased at the back end of last week after Hamas released two US hostages, raising hopes that US-led diplomatic efforts would temper any wider regional conflict.

However, rhetoric in the Middle East remains high after Iran's Foreign Minister Hossein Amir-Abdollahian on Sunday said that the region had turned into a "powder keg", adding a miscalculation by Israel could lead to "heavy and bitter" consequences for them.

US Secretary of State Antony Blinken also warned Sunday there was a "likelihood" of Iran and its proxies escalating violence in the broader Middle East.

"We don't want escalation. If we don't want to see a second or third front develop, we don't want to see our forces or our personnel come under fire. But if that happens, we're ready for it," he told NBC television.

Economy

On the economic front, US Fed chairman Jerome Powell failed to offer clarity about the future direction of monetary policy in comments last week, as interest rates continue to soar.

The 10-year Treasury yield hit a 16-year high of almost 5% last week, while 8% mortgage rates were also threatening to derail the US housing market.

China posted better results last week, including Q3 GDP of 4.9% year-on-year, supported by modest stimulus measures. However, underlying issues remain, including higher debt levels and a wobbling property sector.

"China's economy is showing signs of recovery, but there's widespread skepticism about the sustainability of this momentum, not to mention the quality of the data," said Stephen Innes, managing partner SPI Asset Management.