Brent crude oil began the week trading steadily below $118 as geopolitical tension and an overall positive sentiment regarding the global economy supported prices. The commodity traded at $117.89 at 8:45 GMT on Monday morning.
Data last week put pressure on Brent prices after eurozone nations posted large drops in GDP, indicating the region still had a long way to go toward recovery.
The US also released worrying figures that showed industrial production had fallen and that the nation's manufacturing sector was stalling. However, most believe the US economy is improving, and that small setbacks like this one are likely to be temporary.
Oil supply seemed to be the largest factor affecting Brent prices at the start of the week as tension in the Middle East continued to underpin prices.
After unsuccessful talks between the West and Iran left the dispute over Tehran's nuclear program unresolved, sanctions designed to cut funding to the program by limiting oil supply remained in place. According to CNBC, negotiations are expected to resume at another round of talks set for February 26th.
A decrease in Saudi Arabian crude output also kept Brent prices elevated this week. OPEC supply surveys showed that the nation cut back its production more than expected, and exports fell for the third month in a row in December.
Moving forward, crude demand is expected to increase as optimism within some of the top oil consuming nations pushes prices up. Investors will be watching for US housing data, due out later this week, to find more evidence of recovery.
The outlook in Japan is also improving, after no direct criticism was offered at the G20 summit in regard to the yen's recent weakening. However, nuclear testing in North Korea is threatening to disrupt Asian markets as tension rises over the country's nuclear capabilities.
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