Crude oil prices have started the week with gains, buoyed by hopes of a rate cut and recovering from a second consecutive weekly loss posted last Friday. The significant news at the beginning of the week is President Joe Biden’s announcement that he will not seek a second term.
Biden expressed his support for Kamala Harris as the Democratic nominee, emphasising the need for the party to unite against Trump. According to a Bloomberg report, Harris, if nominated and elected, would be tougher on the oil industry than Biden, given her record as California attorney general where she sued Big Oil and supported banning fracking. The full impact of Biden’s announcement will become clearer later, but for now, the anticipation of rate cuts is driving higher prices.
ANZ analysts, quoted by Reuters, noted that since the June FOMC meeting, inflation and labour market data have indicated that disinflation and labour market rebalancing are underway, which might prompt the Fed to start cutting interest rates in September.
Oil prices have also been supported by wildfires in Alberta, threatening nearly 350,000 barrels per day in production capacity, as reported by the Alberta Energy Regulator and Alberta Wildfire. Additionally, the escalation of the Middle Eastern conflict has contributed to the rally. Over the weekend, Israel targeted sites in Yemen, including an oil storage facility and a power plant, in response to drone attacks. Yemen’s Houthis have vowed retaliation.
Challenger Energy Group plc (LON:CEG) is a Caribbean and Atlantic margin focused oil and gas company, with a range of petroleum assets located onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay.
