Oil prices steadied for a second day on Tuesday as the dollar rose amid political uncertainty in the United States after an attack on US presidential candidate Donald Trump while investors monitored the progress of talks on a ceasefire in Gaza.
Brent crude futures settled at $85.05 after falling 0.7% during today’s trading to $84.48 a barrel.
The price of US West Texas Intermediate crude reached $82.28 per barrel.
The dollar rose today while US bond futures fell as investors bet that the assassination attempt on Trump will make his victory in the upcoming presidential election more likely.
Dollar rise
“The (US dollar) is expected to benefit from the assassination attempt on former President Trump, which increases his chances of winning the election,” said Tony Sycamore, market analyst at IG.
The stronger dollar puts pressure on oil prices, as buyers using other currencies must pay more for dollar-denominated crude.
Last week, Brent crude fell more than 1.7% after four weeks of gains, while US West Texas Intermediate crude futures fell 1.1% as weak oil demand in China, the world’s largest crude importer, countered strong summer consumption in the United States.
China’s crude oil imports fell 2.3 percent in the first half of this year to 11.05 million barrels per day amid disappointing fuel demand and as independent refiners cut output due to weak profit margins.
China reported Monday that it grew less than expected in the second quarter of the year at 4.7%, the slowest growth the country has recorded since early 2023, when China was emerging from a zero-Covid-19 policy that had stifled growth.
In the Middle East, talks aimed at ending Israel’s war on Gaza broke down on Saturday after three days, although a Hamas official said yesterday that it had not withdrawn from the negotiations.
Uncertainty over the volatile situation in the Middle East has kept the geopolitical risk premium in oil high.
The number of active oil rigs in the United States, an early indicator of future production, fell by one to 478 last week, the lowest since December 2021, energy services firm Baker Hughes reported on Friday.
However, oil markets remain broadly supported by supply cuts from the OPEC+ group, with Iraq’s oil ministry saying it will compensate for any excess oil production from the start of 2024.
gold
In the context of the markets, gold prices fell today, in light of the rise of the dollar and investors’ anticipation of comments from Federal Reserve officials (the US central bank) and the release of economic data to gain more evidence about the path of interest rates in the United States.
Spot gold fell 0.1% to $2,409 an ounce, while US gold futures fell 0.33% to $2,412.60.
Markets are pricing in a 93% chance that the Fed will cut interest rates in September.
Gold is seen as a hedge against geopolitical turmoil, and the appeal of the non-yielding metal usually increases when interest rates are low.
