- Brent traded near $85 a barrel after paring an early gain, while West Texas Intermediate was below $82.
Oil fell as an assassination attempt on Republican presidential contender Donald Trump brought political risk squarely into focus, with China’s Third Plenum also kicking off on Monday.
Brent traded near $85 a barrel after paring an early gain, while West Texas Intermediate was below $82. The attack on the former president injected a fresh dose of uncertainty into the US election race. The dollar moved modestly higher, making commodities including oil that are priced off the currency more expensive for most buyers.
Oil remains solidly higher for the year, helped by OPEC’s output curbs and stronger fuel demand over the Northern Hemisphere summer. The Chinese Communist Party’s Third Plenum this week, which will set the nation’s broad economic and political priorities, will be closely watched for clues on the growth trajectory in the world’s largest crude importer.
China’s appetite for crude oil to soybeans has shrunk over the first six months of the year, raising concerns over demand as its economic growth slows. The International Energy Agency said the Asian nation’s slowdown would likely weigh on global oil consumption growth, although OPEC in its corresponding report had a more bullish view instead.
“It’s not surprising following the attempted assassination of former President Donald Trump over the weekend that we are seeing a stronger US dollar, and that strength is weighing on oil,” said Warren Patterson, head of commodities strategy for ING Groep NV. “In addition, the market is also coming around to the idea that Chinese oil demand could very well disappoint this year.”
Even so, time spreads signal robust near-term demand, as the gap between Brent’s two nearest contracts stayed in a bullish, backwardated structure, with the nearest contract at a premium over the later-dated one. At 92 cents a barrel, it’s about double what it was a month ago.
First Published Date: 15 Jul 2024, 07:50 AM IST