Light sweet crude for the January delivery surged 1.09 percent or 95 cents to $87.87 a barrel in electronic trading on the New York Mercantile Exchange during the Asian trading hours. Brent crude oil futures for the January delivery gained 0.73 percent or 80 cents to $109.75 a barrel on the ICE futures exchange in London.
Oil prices advanced as the fighting between Israel and Palestine continues to escalate, raising concerns over supply disruptions. Israel continued to bomb Palestinian militant targets in Gaza, including the media operations of Hamas, from the sea and air on the fifth day. At least 11 Palestinian civilians including women and four small children were killed in an Israeli air strike Sunday.
“The market is concerned about an escalation to the conflict in Israel. Nervousness about the Middle East is forcing the hand of a few short positions or wagers on falling prices,” Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney, told Bloomberg.
Sentiment was also supported on hopes that U.S. lawmakers will soon arrive at a consensus to avoid the "fiscal cliff," a set of spending cuts and tax increases that will automatically take effect beginning of next year and threaten to push the U.S. back into recession unless the government takes steps to prevent it.
“On the US fiscal cliff, there is hope that the White House and the Republicans may find common ground and avoid the political brinksmanship that led America to lose one of its triple-A debt rating in August 2011. President Barack Obama may yet get an agreement from the Republicans to extend tax cut for most Americans except the top income earners,” DBS Bank Ltd said in a note.
On Friday, light sweet crude for the January delivery gained 1.2 percent or $1.05 and settled at $86.92 a barrel on the New York Mercantile Exchange while Brent crude for the January delivery advanced 0.87 percent or 94 cents to settle at $108.95 a barrel.