Oil Prices Spike as Investors Anticipate US Rate Cuts

22 Jul 2024 , 10:42 AM

Oil prices surged in early trade on Monday as investors hunt for signs of a rate-cut cycle that may begin as soon as September.

Brent crude prices were up 48 cents, or 0.57%, at $83.10 a barrel, while US West Texas Intermediate crude futures rose 42 cents, or 0.52%, to $80.55.

The United States Federal Reserve will convene its next Federal Open Market Committee (FOMC) meeting on interest rates on July 30-31, during which investors expect the Fed to keep rates constant while watching for any indication of a cut later in the year.

On the political front, U.S. President Joe Biden dropped his reelection campaign on Sunday due to pressure from fellow Democrats and endorsed Vice President Kamala Harris as the party’s nominee to challenge Republican Donald Trump in November.

China’s slower-than-expected economic growth of 4.7% in the second quarter raised fears last week about the country’s oil demand, which continues to weigh on prices.

On Sunday, China unveiled a strategy statement listing stated aspirations, ranging from growing innovative industries to enhancing the business environment, but analysts see little signs of imminent fundamental shifts in the world’s second-largest economy.

The 60-point paper was published following last week’s closed-door meeting of the Communist Party’s Central Committee, which occurs every five years.

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