In the world of finance and investing, oil prices are on the rise as early trade on Monday shows promising signs amid expectations of a U.S. interest rate cut this week. However, gains are being limited by U.S. supply resumptions post-Hurricane Francine and weaker data coming out of China.
Oil futures for November saw a 0.2% increase, up 15 cents to reach $71.76 a barrel at 0015 GMT. Meanwhile, October futures were up 0.3%, with a 23-cent increase to hit $68.88 a barrel.
The market had previously seen lower settlements due to concerns about supply disruptions easing as Gulf of Mexico crude production resumed following Hurricane Francine. Additionally, rising data indicated a weekly rise in the U.S. rig count.
Despite these improvements, a significant portion of crude oil production and output in the Gulf of Mexico remains offline in the aftermath of the hurricane.
Investors are closely watching the upcoming U.S. Federal Reserve meeting on September 17-18 to see how aggressive a rate cut the central bank will deliver. Speculation is high, with Fed fund futures suggesting a possible 50 basis points cut instead of the expected 25 bps.
Lower interest rates can potentially boost economic activity by reducing borrowing costs, which, in turn, could lead to increased demand for oil.
In China, industrial output growth has slowed to a five-month low in August, while other economic indicators such as retail sales and new home prices have also weakened. Oil refinery output in the country has fallen for the fifth consecutive month due to disappointing fuel demand and weak export margins.
On the political front, the dollar has remained stable following reports of Republican presidential candidate Donald Trump being safe after a potential second assassination attempt. In the Middle East, tensions have risen as Prime Minister Benjamin Netanyahu vows to retaliate against Iran-aligned Houthis after they reached central Israel with a missile for the first time.
Overall, these factors are influencing oil prices and the broader financial markets, making it essential for investors to stay informed and adapt their strategies accordingly.
