Oil prices posted aÂ modest rise Monday, tracking a Wall Street stock rebound and amid geopolitical concerns as key producer Iran test-fired missiles ahead of talks over its atomic program.
New Yorkâ€™s main contract, light sweet crude for November delivery, rose 82 cents from Fridayâ€™s close to 66.84 dollars per barrel.
Londonâ€™s Brent North Sea crude for delivery in November gained 43 cents to 65.54 dollars a barrel.
The modest price rise was â€œa technical reboundâ€ after falling last week, said Jason Schenker of Luxury Economics as Wall Street shares roared back Monday after a poor showing last week, boosted by a pick-up in corporate news.
Oil futures dropped nearly eight percent over two days last week, after the US Energy Department unexpectedly reported a big increase in oil and gasoline inventories.
But prices swung higher Friday as world leaders demanded that nuclear inspectors from the International Atomic Energy Agency (IAEA) be granted access to a previously secret Iranian plant and threatened to impose tough new sanctions on Tehran.
On Monday, Iran, the third biggest global oil exporter after Russia and Saudi Arabia, test-fired long-range missiles that it says could reach targets inside Israel.
The United States has said the missile tests were â€œprovocativeâ€ and urged the Islamic republic to agree to â€œunfettered accessâ€ to its newly revealed enrichment plant.
Washington and its regional ally Israel have not ruled out a military option to stop Tehranâ€™s nuclear drive, which the West says is aimed at making nuclear weapons while Iran says it is solely for peaceful ends.
â€œAny consideration of an outbreak of hostilities immediately calls into focus the Strait of Hormuz, adjacent to Iran, through which flows 25 percent of the worldâ€™s oil supply,â€ said John Kilduff of MF Global.
â€œThe escalation of tensions with Iran underlines how another element, geopolitics, of the many that caused prices to peak in 2008, can resurface suddenly,â€ he warned.
Iran and five UN Security Council permanent members â€” the United States, Russia, China, Britain and France â€” plus Germany meet in Geneva on Thursday to discuss Tehranâ€™s disputed atomic program.
The oil market was also dogged by concerns about weak energy demand in the United States, the worldâ€™s biggest oil-consuming nation.
Concerns over weak US energy demand resurfaced after data released Friday showed orders for American durable goods fell 2.4 percent in August against market expectations for a rise of 0.4 percent.
Durable goods are those likely to last three years or more, such as cars and appliances, and represent a key segment of the manufacturing sector.
Energy demand plunged after the global economy slipped late last year into its worst recession since the 1930s.
This sent oil prices tumbling from historic highs of more than 147 dollars in July 2008 to around 32 dollars in December.
Prices have since recovered somewhat but investors remain concerned over the pace of the upturn.