Oil drops as investors look past Biden exit, focus on weak fundamentals
Oil prices fell for a second consecutive session on Monday to their lowest level in over a month, as investors looked past U.S. President Joe Biden's decision to end his reelection bid and focused on rising stockpiles and signs of weak demand.
Brent crude futures fell $0.23, or 0.3%, to settle at $82.40/bbl, the lowest since June 11. U.S. West Texas Intermediate crude futures for August delivery expired on Monday after falling $0.35 to $79.78/bbl, also a one-month low.
Biden ended his campaign on Sunday and endorsed Vice President Kamala Harris as the Democrat who should face Republican Donald Trump in the November election.
Traders took Biden's decision in stride while shrugging off escalating tensions in the Middle East, U.S. fuel distributor TACenergy's trading desk wrote on Monday. Market participants were focusing on a weak technical outlook, ample inventories and soft demand, they wrote.
While the oil market is visibly tight, it is expected to reach a balance by 4Q and a surplus by next year, dragging Brent prices down to the mid-to-high $70s range in 2025, according to analysts at Morgan Stanley.
Global petroleum inventories rose last week, according to a StoneX analysis. Total oil and refined products stockpiles are trending higher in all major trading hubs except Europe, StoneX analyst Alex Hodes noted.
Energy policy will likely be a core debating point between Harris and Trump, but Citi analysts believe neither will promote policies that have an extreme effect on oil and gas operations as core positions.
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