Oil Prices Rebound Amid Political Uncertainty
In a volatile market, oil prices rebounded on Monday, finding support from political uncertainty in the US and the Middle East. Despite a stronger dollar and weak demand in China, Brent crude futures rose by 0.2 percent to $85.18 a barrel, while US West Texas Intermediate crude stood at $82.41 a barrel, up 0.2 percent.
The impact of a failed assassination attempt on US presidential candidate Donald Trump caused the dollar to firm, but oil prices remained resilient. IG market analyst Tony Sycamore highlighted the uncertainty that this event brings to the upcoming election.
In the Middle East, talks to end the Gaza conflict between Israel and Hamas paused after three days, with an Israeli attack killing 90 people. The geopolitical premium in oil remains high due to the volatile situation in the region.
Additionally, supply cuts from OPEC+ continue to support oil markets, with Iraq’s oil ministry pledging to address any overproduction since the start of 2024. However, concerns about weakening demand in China persist.
China’s crude oil imports dropped by 2.3 percent in the first half of the year, reflecting disappointing fuel demand and reduced output from independent refiners. Crude throughput at Chinese refineries also saw a decline in June, hitting the lowest level of the year so far.
Amidst these challenges, China’s slowing economy and the US active oil rig count hitting its lowest level since December 2021 are further factors influencing the oil market. Expectations for Beijing to implement additional stimulus measures to boost the economy remain high.