Oil prices dropped for a second consecutive day as the dollar strengthened amidst political turmoil in the U.S. following an attack on presidential candidate Donald Trump. Investors are also closely monitoring talks for a Gaza ceasefire.
Crude oil futures fell by 0.7% to $84.48 a barrel, while U.S. West Texas Intermediate crude was down 0.7% to $81.65 a barrel. The dollar's rise has impacted oil prices, as a stronger dollar makes dollar-denominated crude more expensive for buyers using other currencies.
Last week, Brent crude fell by more than 1.7% and WTI futures slid by 1.1% due to weak oil demand in China and robust summer consumption in the U.S. China's oil imports have fallen, reflecting disappointing fuel demand and reduced production by independent refiners.
On the geopolitical front, talks to end the Gaza conflict between Israel and Hamas have temporarily stalled, keeping the geopolitical premium in oil elevated. The U.S. active oil rig count decreased to its lowest level since December 2021, indicating a potential decline in future output.
Despite these challenges, oil markets are supported by supply cuts from OPEC+ countries. Iraq's oil ministry has pledged to offset any overproduction since the beginning of 2024.
Analysis:
The fluctuation in oil prices due to the strengthening dollar and geopolitical tensions can impact global economies and individual finances. Consumers may see changes in fuel prices, affecting their transportation costs and overall budget. Investors in the oil market should closely monitor political developments and supply dynamics to make informed decisions. Additionally, businesses reliant on oil should prepare for potential shifts in prices that could impact their operations and profitability. Overall, staying informed and adaptable to changing market conditions is key to navigating the uncertainties in the oil market.