Oil prices remained stable on Monday following President Joe Biden’s decision not to seek re-election.
At the same time, market attention turned towards potential U.S. interest rate adjustments, which were expected as early as September.
Brent crude futures saw a minor dip of 9 cents to settle at US$82.54 per barrel by 0933 GMT, while U.S. West Texas Intermediate crude futures decreased by 19 cents to US$79.94.
Over the past month, Brent crude has maintained stability within US$82 to US$88 per barrel.
Investors closely monitor the upcoming U.S. Federal Reserve policy review scheduled for July 30-31, anticipating no immediate rate changes but signalling potential cuts in September. This expectation has been a focal point for market sentiment.
President Biden’s announcement of endorsing Vice President Kamala Harris as the Democratic candidate for the upcoming November elections had minimal impact on oil markets. Analysts suggest that the influence of U.S. presidents on domestic oil production is overstated, with U.S. output reaching record highs in recent years despite regulatory measures aimed at climate change.
Suvro Sarkar, energy sector team lead at DBS Bank, remarked, “Given his anti-EV stance, a Trump presidency could influence higher demand for oil in the U.S.”
Meanwhile, concerns over global oil demand persist amid China’s slower-than-expected economic growth, reported at 4.7% in the second quarter. This development has weighed on market sentiment despite China’s recent policy adjustments to stimulate economic activity, including reductions in critical short-term policy rates and benchmark lending rates.
Analysts noted that China’s policy announcements reiterated existing economic goals without indicating significant structural changes, maintaining a cautious outlook on the world’s second-largest economy.
Amid these factors, the ongoing effects of OPEC+ production cuts are seen as providing some support to oil prices. However, the potential for increased U.S. production could counterbalance these efforts, potentially leading to lower oil prices.
Market analysts continue to assess these dynamics closely as they navigate the complexities of global oil markets amidst evolving economic conditions and policy developments.
