Oil gains after Israel strikes back at Hamas attack

Forex Volatility

♦ Israel currency shekel fell to 8-yr low

♦ Its Central Bank will sell up to $30 bn to prop up the currency

♦ Shekel was trading on Monday at 3.9158/USD

Bangkok: Crude oil prices surged and world share prices were mostly lower on Monday after the Israeli government declared war following deadly attacks by Hamas from the Gaza Strip. US futures declined. The bond market in the US was closed on Monday for the Columbus Day holiday, but the New York Stock Exchange and Nasdaq are open. Oil prices were up more than $3 a barrel. Conflict in the Middle East often pushes oil prices higher given the risk of disruptions to supplies.

“Disruptions or escalations in the region can have far-reaching implications for energy markets, global supply chains, and geopolitical dynamics,” Stephen Innes of SPI Asset Management said in a commentary.

The fighting has not yet had any discernible impact on oil output, but geopolitical escalations in the Middle East typically lead to a “buy-first-ask-questions-later” response, he said. Oil prices had eased back from highs of the mid $90 range last month in recent days, falling sharply last week. Early Monday, US benchmark crude oil was up $3.12 at $85.91 per barrel in electronic trading on the New York Mercantile Exchange. It picked up 48 cents on Friday. Brent crude, the pricing basis for international trading, advanced $3.10 per barrel to $87.68 per barrel. Tel Aviv’s main stock benchmark was up 1per cent . It closed 6.5per cent lower Sunday, after the attacks. Early Monday, Israel’s Central Bank said it will sell up to $30 billion in foreign exchange to prop up the shekel, which fell to a near 8-year low. It also said it will provide up to $15 billion to support market liquidity. The shekel was trading Monday at 3.9158 shekels per dollar.

In times of war, the US dollar is often sought as a safe haven, as is gold. The price of gold was up 1 per cent early Monday at $1,864.30 per ounce. Shares were lower, meanwhile, in most major markets. Germany’s DAX lost 0.7 per cent to 15,128.67 and the CAC 40 in Paris lost 0.4 per cent to 7,030.21. In London, the FTSE-100 advanced 0.3 per cent to 7,514.15. The future for the S&P-500 was down 0.5 per cent while that for the Dow lost 0.4 per cent . In Asian trading, Shanghai reopened after a weeklong holiday, falling 0.4 per cent to 3,096.92. The Hang Seng in Hong Kong gained 0.2 per cent to 17,486.48.

Its market reopened for afternoon trading after staying closed in the morning due to typhoon warnings.