WTI crude futures fell 4% to near $82 a barrel on Monday, close to two-week lows, as traders mull the economic and monetary policy outlook and the war in the Middle East. Israel expanded ground operations in Gaza over the weekend, and although the potential for a broader conflict persists, it seems to have temporarily eased. At the same time, traders await key monetary policy decisions from the Fed, the BoJ and the BoE and key economic data for China and the US to assess demand prospects. Meanwhile, the World Bank said it expected global oil prices to average $90 a barrel in the fourth quarter, and to drop to an average of $81 a barrel over next year, assuming the Middle East conflict does not escalate into a wider one. If, however, the conflict were to escalate and disrupt oil supplies, prices could shoot up by as much as 75% to $157 a barrel under the bank’s worst-case-scenario.
