Surging Oil Prices Amid Biden’s Exit Reveal Fragile Market Fundamentals: Investors Brace for Impact
Oil prices dropped to their lowest point in over a month on Monday, as market participants ignored U.S. President Joe Biden’s decision to end his reelection campaign and endorsed Vice President Kamala Harris, instead concentrating on rising inventories and signs of weak demand. Brent crude futures decreased by 0.7% to $82.09 per barrel, and U.S. West Texas Intermediate (WTI) for August delivery fell to $79.80 per barrel.
Biden’s exit from the reelection race, announced on Sunday, and his endorsement of Harris did not significantly impact the markets. Analysts from Morgan Stanley predict that the current tight oil market will balance by the fourth quarter of this year and achieve a surplus in 2025. Consequently, Brent prices are projected to drop to the mid-to-high $70s range by then.
Middle Eastern tensions, including Israeli airstrikes on Houthi targets in Yemen, have not swayed market focus from weak oil fundamentals. Economic maneuvers, such as China cutting key interest rates to stimulate its economy, also failed to bolster oil prices. UBS analyst Giovanni Staunovo remarked that the rate cut was insufficient to shift crude oil sentiment positively.
In the U.S., the Federal Reserve’s upcoming policy meeting could influence market dynamics, with discussions suggesting a possible rate cut. Investors anticipate the cut might have potential to benefit risk-sensitive assets like oil.
As geopolitical issues and domestic policy shifts unfold, market participants remain predominantly focused on the weak technical outlook and ample supplies.
Original Story https://www.livemint.com/news/world/oil-drops-as-investors-look-past-biden-exit-focus-on-weak-fundamentals-11721673709771.html
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