Oil Prices Rise Amid Expectations of Rate-Cut Cycle
In the early hours of Monday, oil prices surged as investors eagerly awaited signs of an upcoming rate-cut cycle set to kick off in September, as reported by Reuters.
Brent crude prices saw a 0.57 percent increase, rising by 48 cents to reach $83.10 per barrel by 2:35 a.m. Saudi time. Meanwhile, US West Texas Intermediate crude futures climbed 0.52 percent, with a 42-cent boost to hit $80.55.
According to ANZ Research, the Federal Reserve is likely to initiate its interest rate cutting cycle in September, following indications of disinflation and labor market rebalancing since the June FOMC meeting.
The upcoming Federal Open Market Committee meeting on interest rates, scheduled for July 30-31, is anticipated to keep rates steady. However, investors will be keenly observing for any hints of a potential cut later in the year.
In a surprising turn of events, US President Joe Biden withdrew his reelection bid on Sunday, yielding to pressure from fellow Democrats. He threw his support behind Vice President Kamala Harris as the party’s nominee to challenge Republican Donald Trump in November.
Concerns over China’s slower-than-expected economic growth of 4.7 percent in the second quarter have cast a shadow on the country’s oil demand, continuing to impact prices.
China recently unveiled a policy document outlining its ambitions, which include advancing industries and enhancing the business environment. Analysts, however, have not detected any immediate structural changes in the world’s second-largest economy.
The release of this 60-point document follows a closed-door meeting of the Communist Party’s Central Committee last week, a gathering that occurs approximately every five years.