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Brent crude futures gained 73 cents, or 0.9%, to $83.69 a barrel
at 0852 GMT, while U.S. West Texas Intermediate crude futures
were at $78.95 a barrel, up 84 cents, or 1.1%.
Last week, both futures contracts posted their steepest weekly
loss in three months with Brent falling more than 7% and WTI
down 6.8%, as investors weighed weak U.S. jobs data and the
possible timing of a Federal Reserve interest rate cut.
The geopolitical risk premium in oil prices also eased as talks
for a Gaza ceasefire were underway.
However, prospects for a deal narrowed as Hamas reiterated its
demand for an end to the war in exchange for the freeing of
hostages and Israel appeared poised to launch a long-threatened
assault in the Southern Gaza Strip.
On Monday, Israel's military called on Palestinian civilians to
evacuate Rafah as part of a 'limited scope' operation.
"News that Israel wants to go ahead and extend its operation
into Rafah, risks derailing a potential ceasefire agreement and
reigniting Middle Eastern geopolitical tensions which had
appeared to be easing," IG markets analyst Tony Sycamore said.
Also supporting oil was Saudi Arabia's move to raise the
official selling prices (OSPs) for its crude sold to Asia,
Northwest Europe and the Mediterranean in June, signalling
expectations of strong demand this summer.
This comes after Saudi Arabia raised June OSPs for most regions
amid a tightening of supplies this quarter, he added.
In China, the world's largest crude importer, services activity
remained in expansionary territory for the 16th straight month,
while growth in new orders accelerated and business sentiment
rose solidly, boosting hopes of a sustained economic recovery.
(Additional reporting by Florence Tan; Editing by Sonali Paul
and Louise Heavens)
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