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Oil Falls Further as Dollar Strengthens After Trump’s Comments
Last Updated: 15th July 2024 - 11:33 am
Oil prices dropped for a second consecutive day on Monday as the dollar strengthened amid political uncertainty in the U.S. following an attack on presidential candidate Donald Trump, while investors monitored the progress of Gaza ceasefire talks.
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Brent crude futures declined by 55 cents, or 0.7%, to $84.48 a barrel by 0109 GMT after a 37-cent drop on Friday. U.S. West Texas Intermediate crude also fell 56 cents, or 0.7%, to $81.65 a barrel.
The dollar's rise and a slip in U.S. bond futures on Monday were influenced by investor speculation that the attack on Trump increased his chances of winning the upcoming presidential election. "The (U.S. dollar) is expected to be a beneficiary of the assassination attempt on former President Trump as it increases the chances of his re-election," stated IG market analyst Tony Sycamore. A stronger dollar typically lowers oil prices as buyers using other currencies must pay more for dollar-denominated crude.
Last week, Brent saw a decline of over 1.7% after four weeks of gains, while WTI futures dropped 1.1% due to weak oil demand in China, the world's top importer, despite robust summer consumption in the U.S. China's crude oil imports decreased by 2.3% in the first half of this year to 11.05 million barrels per day, affected by disappointing fuel demand and reduced production by independent refiners due to weak profit margins. China is expected to release data on Monday indicating a slowdown in its economy in the second quarter, influenced by a prolonged property downturn and job insecurity, maintaining expectations that Beijing will need to implement more stimulus measures.
In the Middle East, talks to end the Gaza conflict between Israel and Hamas were halted on Saturday after three days, though a Hamas official indicated on Sunday that discussions had not ceased. Concurrently, an Israeli attack targeting a Hamas military leader resulted in the deaths of 90 people on Saturday. The ongoing volatile situation has kept the geopolitical premium in oil elevated.
The U.S. active oil rig count, an early indicator of future output, decreased by one to 478 last week, marking the lowest count since December 2021, according to energy services firm Baker Hughes.
Nonetheless, oil markets remain broadly supported by supply cuts from OPEC+, with Iraq's oil ministry committing to compensate for any overproduction since the beginning of 2024.
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Tanushree Jaiswal
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