TOKYO, July 22 (Reuters) – Oil prices rose in Asia on Monday as investors anticipated potential U.S. interest rate cuts as early as September.
By 0651 GMT, Brent crude futures had gained 32 cents, or 0.39%, reaching $82.95 per barrel. Meanwhile, U.S. West Texas Intermediate crude futures increased by 34 cents, or 0.42%, to $80.47 per barrel.
ANZ Research noted in a statement, “Since the June FOMC meeting, inflation and labor market data indicate that disinflation and labor market rebalancing are occurring. This is expected to allow the Fed to begin cutting interest rates in September.”
The U.S. Federal Reserve is set to review its policy on July 30-31. Investors expect rates to remain unchanged but are looking for signs of a rate cut in September.
President Joe Biden’s announcement on Sunday that he will not seek re-election did not significantly impact oil markets. Biden endorsed Vice President Kamala Harris to run against Republican Donald Trump in the November election.
Suvro Sarkar, energy sector team lead at DBS Bank, commented, “We believe the U.S. president’s influence on oil production is overrated.” He noted that U.S. output hit record highs last year despite Biden’s climate initiatives. Sarkar added, “A Trump presidency could boost U.S. oil demand due to his anti-EV stance.”
Tony Sycamore, a market analyst with IG, stated that higher oil demand under Trump could offset some benefits from recent OPEC+ production cuts. He said, “Unrestricted U.S. oil production could lower prices, potentially forcing marginal producers to halt production.”
Concerns about China’s demand for oil persisted after the country reported slower-than-expected economic growth of 4.7% in the second quarter. This news weighed on oil prices last week. On Monday, China surprised markets by lowering a key short-term policy rate and benchmark lending rates to stimulate the economy.
A policy document released on Sunday, following a leaders’ meeting in China last week, outlined ambitions to develop advanced industries and improve the business environment. Analysts did not see any immediate signs of structural changes in the world’s second-largest economy.