Crude Rising Following Biden’s Decision To Step Aside

Oil prices fell sharply on Friday as the stronger USD (BBDXY index +0.2%), concerns re demand from China in addition to speculation of a Gaza ceasefire weighed on benchmarks. Crude is up moderately today though in the wake of President Biden’s decision not to stand for re-election which has pressured the USD (BBDXY -0.1%). The 10bp PBoC cut in the 7-day repo may also support oil in today’s trading.

• WTI’s September contract fell 3.3% on Friday to $78.60 to be down 2.5% in July. The benchmark fell to a low of $78.59, which was the softest since mid-June. It has started today 0.5% higher at $79.03.
• Brent was 3% lower at $82.56/bbl to be down 2.9% this month. The trend condition remains bullish but there is a corrective cycle. There has been a clear break of $83.96, 50-day EMA, which opens $82.31, a Fibonacci retracement. Initial resistance is at $87.95, July 5 high.
• Although oil prices have risen since Biden’s decision to stand aside and endorse VP Harris as the Democratic candidate in November’s election, she is seen as less supportive of the sector and may be more likely to challenge its environmental record. She sued oil companies when she was California’s attorney general and has been more critical of fracking than Biden, according to Bloomberg.
• On the weekend, Houthis launched a drone attack on Tel Aviv and the Israelis retaliated. Geopolitical tensions in the region are failing to ease. Tensions on the border with Lebanon also continue.
• Wildfires in Alberta Canada continue to threaten the oil sands with around 348kbd of output at risk, according to the Alberta Energy Regulator.