Crude oil prices started trading with a gain this week on hopes of a rate cut, bouncing back after posting a second consecutive weekly loss on Friday. The biggest news to start the week however is President Joe Biden's announcement that he will end his bid for a second term.
"Today I want to offer my full support and endorsement for Kamala to be the nominee of our party this year. Democrats - it's time to come together and beat Trump. Let's do this," Biden said on X.
According to a Bloomberg report, Harris-if nominated and if elected-would be tougher on the oil industry than Biden was, with the publication noting Harris' track record as California attorney general who sued Big Oil. She has also declared she was in favor of banning fracking.
The full effect of Biden's announcement, however, should become more palpable later in the day. For now, it's rate hopes that are fueling higher prices.
"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 analysts said, as quoted by Reuters.
Wildfires in Alberta have also helped oil move higher today, with close to 350,000 bpd in production capacity at risk, according to the Alberta Energy Regulator and Alberta Wildfire, as cited by Bloomberg.
The Middle Eastern war's latest round of escalation also contributed to the rally, with the prospect of peace moving further in the distance yet again. Over the weekend, Israel struck targets in Yemen in response to a drone attacks, with the targets including an oil storage facility and a power plant. Yemen's Houthis vowed retaliation.
On the bearish side, concern about Chinese demand remains considerable, even after Beijing released a long-awaited policy update that involved no significant changes from the current course followed by the government of the world's largest oil importer.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
2. Wildfires will ease with forthcoming rain
3. China story overdone
4. If interest rates don't fall no way the DEMS are getting I'm again in November
why don't you write about those four things