Oil prices rose in Asia on Monday as investors watched for further signs that the U.S. might start to cut interest rates as soon as September.
Brent crude futures had gained 32 cents, or 0.39%, to $82.95 a barrel by 0651 GMT, and U.S. West Texas Intermediate crude futures had increased 34 cents, or 0.42%, to $80.47.
“Since the June FOMC meeting, inflation and labour market data have signalled that disinflation and labour market rebalancing are in place, which we expect will allow the Fed to begin its interest rate cutting cycle in September,” ANZ Research said in a note.
The U.S. Federal Reserve is due to review policy next on July 30-31, when investors expect it to keep rates unchanged. But they will look for further evidence that a cut will happen at the September meeting.
News that President Joe Biden had decided on Sunday to abandon his re-election bid was not a major factor for oil markets. He has endorsed Vice President Kamala Harris as the candidate who should face Republican Donald Trump in November’s election.
“We think the ability of the U.S. president to influence U.S. oil production is probably overrated,” said Suvro Sarkar, energy sector team lead at DBS Bank, noting that U.S. output reached record highs last year, despite the Biden’s administration’s moves to address climate change.
“If anything, a Trump presidency could influence higher demand for oil in the U.S., given his anti-EV stance,” said Sarkar.
That could offset some of the support markets have gained from recent OPEC+ production cuts, said Tony Sycamore, market analyst with IG.
“The flipside to unrestricted oil production in the U.S. could well be lower oil prices which may have the unintended impact of forcing marginal producers at lower prices to mothball production,” Sycamore said.
Slower-than-expected economic growth of 4.7% for China in the second quarter sparked concerns last week over the country’s demand for oil and continues to weigh on prices.
On Monday, China surprised markets by lowering a key short-term policy rate and benchmark lending rates to boost the economy.
On Sunday, China released a policy document following a leaders’ meeting last week that largely outlined known ambitions, from developing advanced industries to improving the business environment. Analysts did not spot any imminent sign of structural shifts in the world’s second-biggest economy.
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Source: Reuters