Crude oil prices began the week with gains, driven by expectations of a potential rate cut. This rise follows a second consecutive weekly decline. However, the biggest news impacting the market is President Joe Biden’s announcement that he will withdraw from the presidential race.
“I fully support and endorse Kamala as our party’s nominee this year. Democrats, it’s time to unite and defeat Trump. Let’s get this done,” Biden stated on X.
According to Bloomberg, if Kamala Harris is nominated and elected, she may be tougher on the oil industry than Biden. The report highlights Harris’ previous role as California’s attorney general, where she sued major oil companies. She has also expressed support for banning fracking.
The full impact of Biden’s withdrawal will be clearer later in the day. For now, optimism about potential rate cuts is driving oil prices higher.
“Since the June FOMC meeting, inflation and labor market data have indicated progress in disinflation and labor market adjustments. We expect this to allow the Fed to start cutting interest rates in September,” ANZ analysts told Reuters.
Additionally, wildfires in Alberta have supported higher oil prices today, with nearly 350,000 barrels per day of production capacity at risk, according to the Alberta Energy Regulator and Alberta Wildfire.
The recent escalation of conflict in the Middle East also contributed to the price increase. Over the weekend, Israel targeted sites in Yemen, including an oil storage facility and a power plant, in response to drone attacks. Yemen’s Houthis have promised retaliation.
On the downside, concerns about Chinese oil demand persist. Despite Beijing’s recent policy update, there were no significant changes from the current approach of the world’s largest oil importer.