Oil prices saw a slight increase during early trading on Monday, driven by expectations of an upcoming interest rate cut by the US Federal Reserve. However, the gains were limited due to the resumption of US supply following Hurricane Francine and weaker economic data from China. Brent crude futures for November rose by 15 cents, or 0.2%, reaching $71.76 per barrel. Meanwhile, US crude futures for October climbed by 23 cents, or 0.3%, to $68.88 per barrel.
In the previous session, both contracts had closed lower. Concerns over supply disruptions eased as crude production in the Gulf of Mexico resumed, though nearly 20% of oil production and 28% of natural gas output in the region remained offline due to the hurricane’s impact.
Investors are now focused on the upcoming US Federal Reserve meeting, with increasing speculation that the central bank will opt for a larger rate cut. Fed fund futures indicate that investors are betting on a 50 basis point reduction, instead of the previously expected 25 basis points. Lower interest rates generally encourage borrowing, which can stimulate economic growth and, in turn, increase oil demand. However, analysts from ANZ continue to expect a more gradual approach with a 25 basis point cut.
In China, industrial output growth slowed in August, marking the lowest point in five months. Additionally, retail sales and new home prices weakened, and oil refinery output dropped for a fifth consecutive month due to reduced fuel demand and poor export margins.
Meanwhile, the US dollar remained steady following news that presidential candidate Donald Trump was unharmed after what appeared to be a second assassination attempt outside his Florida golf course. On the geopolitical front, Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Iran-aligned Houthis, who launched a missile that reached central Israel for the first time.
Union Jack Oil plc (LON:UJO) is an oil and gas company with a focus on onshore production, development, exploration and investment opportunities within the United Kingdom and the United States of America hydrocarbon sector.
