Oil prices remained relatively unchanged on Monday following President Joe Biden’s announcement that he would not seek a second term. Investors are closely monitoring indications that U.S. interest rates might be cut as early as September.
Brent crude futures dipped 9 cents to $82.54 a barrel, while U.S. West Texas Intermediate crude futures fell 19 cents to $79.94. Over the past month, Brent crude has stabilized, trading between $82 and $88 a barrel.
The U.S. Federal Reserve is set to review its policy on July 30-31, with expectations that rates will remain unchanged. However, there are signs that a rate cut could occur in September. Biden’s decision not to run again did not significantly impact oil markets; he has endorsed Vice President Kamala Harris as the candidate for the upcoming election against Republican Donald Trump.
Suvro Sarkar, energy sector lead at DBS Bank, noted that the U.S. president’s influence on oil production is often overstated, citing record-high U.S. output last year despite the Biden administration’s climate initiatives. Sarkar suggested that a Trump presidency might increase domestic oil demand due to his anti-electric vehicle stance, potentially counteracting some of the support from recent OPEC+ production cuts.
On the other hand, increased U.S. oil production could lead to lower prices, possibly forcing marginal producers to reduce output. Concerns over China’s slower-than-expected economic growth of 4.7% in the second quarter have also weighed on oil prices. On Monday, China surprised markets by lowering key short-term policy rates to stimulate the economy, although analysts noted no immediate signs of structural changes in the country’s economic strategy.