Oil prices fell for a second consecutive session on Monday, hitting their lowest levels in over a month. Investors overlooked U.S. President Joe Biden’s decision not to seek a second term and focused on rising stockpiles and signs of weak demand.
Brent crude futures dropped 47 cents, or 0.6%, to $82.16 per barrel by noon ET, marking the lowest since June 11. U.S. West Texas Intermediate (WTI) crude futures for August delivery, expiring Monday, were down 34 cents, or 0.4%, to $79.79 a barrel, also hitting a one-month low. September WTI futures fell 45 cents to $78.19.
Despite escalating tensions in the Middle East, traders concentrated on a weak technical outlook, ample inventories, and soft demand. Analysts at Morgan Stanley predict the oil market will reach balance by Q4 this year and a surplus by next year, potentially pulling Brent prices to the mid-to-high $70s range in 2025.
President Biden’s campaign exit on Sunday and endorsement of Vice President Kamala Harris for the upcoming election against Republican Donald Trump have not significantly impacted oil prices. Energy policy is expected to be a core debate topic, but analysts believe neither candidate will promote policies drastically affecting oil and gas operations.
Meanwhile, Israeli fighter jets struck Houthi military targets near Yemen’s Hodeidah port, and Israeli-Palestinian tensions continue to escalate. Additionally, China’s recent interest rate cut aimed at boosting its economy failed to lift oil prices, as the move was seen as insufficient to shift overall sentiment.
The U.S. Federal Reserve’s upcoming policy review on July 30-31 may provide further market direction, with investors anticipating potential rate cuts that could positively impact risk-sensitive assets like oil.
