Oil prices stabilized in early Asian trading on Monday, preserving most of last week's over 3% gains, underpinned by geopolitical tensions and stronger economic data.

 

Brent crude futures dropped by 7 cents, or 0.09%, to $79.59 a barrel by 0021 GMT, while U.S. West Texas Intermediate crude futures edged up by 2 cents, or 0.03%, to $76.86.

 

"Traders remain cautious of ongoing tensions in the Middle East," ANZ analysts stated in a note.

 

The potential increase in the Israeli-Palestinian conflict continued to support prices after Iran and Hezbollah pledged retaliation for the assassinations of Hamas leader Ismail Haniyeh and Hezbollah military commander Fuad Shukr.

 

The Israeli invasion into Gaza intensified on Saturday with an airstrike on a school compound that reportedly killed at least 90 people, according to the Gaza Civil Emergency Service, although Israel claimed the death toll was exaggerated. Hamas expressed skepticism about its involvement in new ceasefire talks on Sunday.

 

Brent ended last week up more than 3.5% for the week, while WTI increased by over 4%, driven by supportive economic data and rising hopes of a U.S. interest rate cut.

 

Three U.S. Federal Reserve officials indicated last week that inflation seemed to be cooling sufficiently for the Federal Reserve to consider reducing interest rates as soon as next month.

 

China's consumer prices rose quicker than anticipated in July, and U.S. weekly jobless claims decreased more than expected last week.