Oil rose near $40 a barrel Monday after the conflict between Israel and Gaza's Hamas rulers raised tensions in the Middle East. Light, sweet crude rose $1.24 to $38.96 a barrel on the New York Mercantile Exchange.
The advance in oil was welcome for some investors who have worried that plunging prices signaled a long and severe recession. Oil has fallen more than $100 from its peak of $147.27 a barrel on July 11 as a slowing economy curbed demand. The increase helped oil companies, with Exxon Mobil Corp. shares up more than 1 percent.
However, investors also digested a potential blow to dealmaking on Wall Street. On Sunday, Kuwait's government canceled its $17.4 billion K-Dow Petrochemicals joint venture with Dow Chemical Co., saying it was "very risky" because of the global financial crisis and low oil prices. The joint venture was set to begin Thursday.