Oil prices surged to their highest level on Monday since the summer of 2015, as analysts said the geopolitical risk in the Middle East helped underpin the market.
Brent crude was at $63.81 per barrel at 0615 GMT, down 12 cents from its last close but within $1 of a more than two-year high of $64.65 reached earlier this week.
Gold futures were lower on Tuesday; should the dollar rally further, gold will likely continue its medium-term weakness.
Hezbollah's leader said Saudi Arabia had declared war on Lebanon and his Iran-backed group, accusing Riyadh of detaining Saad al-Hariri and forcing him to resign as Lebanon's prime minister to destabilize the country.
WTI crude oil, meanwhile, also moved higher, hitting $57.35 per barrel, before edging a little lower.
"There is no doubt that the market is rebalancing at an accelerating pace; stability is steadily returning; and there is far more light at the end of the dark tunnel we have been travelling down for the past three years".
On this front, after a slow start to the year, the OPEC cuts are paying off. But it's also the demand growth that is reducing the global overhang.
The voices that U.S. shale might underperform expectations could only be a bullish sign for oil prices.
China's October oil imports fell to just 7.3 million bpd from a near record-high of about 9 million bpd in September, according to data from the General Administration of Customs.
Traders said higher prices in recent weeks were the result of efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to tighten the market by cutting output, as well as strong demand and rising political tensions.
"Our base case is that we do not get a full-year extension on November 30", Ed Morse, head of commodities research at Citigroup, told Bloomberg.
IRAQ: Iraq will be the last Middle East producer to announce its monthly prices this month. I think current market fundamentals justify a price of $60 - $62, but any further extension in the rally, would likely be an additional political risk premium.
"The most notable thing in the EIA report was that production increased".
The University of Michigan released a report on Friday showing a bigger than expected pullback in consumer sentiment in the month of November.
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