Oil prices fell for a second straight session on Monday to a one-month low as the market shrugged off U.S. President Joe Biden’s decision to end his re-election bid and focused on rising inventories and signs of weak demand.
Brent crude futures fell 54 cents, or 0.7%, to $82.09 a barrel by 2:04 p.m. ET (1804 GMT), the lowest since June 11. U.S. West Texas Intermediate crude futures for August delivery, which expires on Monday, fell 33 cents to $79.80 a barrel, also the lowest in a month. WTI futures for September delivery fell 55 cents to $78.09.
Biden ended his re-election campaign on Sunday and endorsed Vice President Kamala Harris as the Democrat to face Republican Donald Trump in November’s election.
Judging by the market reactions, everything indicates that the political drama that culminated in Joe Biden’s withdrawal from running for a second term had already been anticipated and integrated by the market.
Traders took Biden’s decision in stride, while ignoring rising tensions in the Middle East. Market participants were focusing on a technical outlook based on ample inventories and weak demand.
While the oil market is visibly tight at the moment, it is expected to reach equilibrium in the fourth quarter of this year and a surplus next year, taking Brent prices into the $70 to $75 range by 2025, according to analysts at Morgan Stanley.
Energy policy is likely to be a central point of debate between Harris and Trump, but Citi analysts believe neither will push policies that would have an extreme effect on U.S. oil and gas operations.
In the Middle East, Israeli fighter jets struck Houthi military targets near Yemen’s Hodeidah port on Saturday, killing at least six people. The Houthis told media on Sunday that they will continue to attack Israel and will not abide by any rules of engagement.
Israel also sent tanks back into Gaza’s Khan Younis metropolitan area, and at least 70 Palestinians were killed by Israeli fire, Gaza medics said on Monday.
Elsewhere, China, the world’s biggest oil importer, surprised markets by cutting a key short-term interest rate and benchmark lending rates to boost its economy, but the move failed to support oil prices.
“The Chinese interest rate cut was too small to improve overall sentiment on crude oil,” according to UBS.
The US Federal Reserve will hold a monetary policy meeting on July 30-31, with investors expecting rates to be kept steady, although there are signs of a possible cut in September.
2024-07-22 21:35:46