US West Texas Texas Intermediate (WTI) crude’s front-month contract, August, settled at $79.78 per barrel - down 35 cents, or 0.44%. WTI lost 4% over the course of two prior weeks. In Monday’s session, it fell to $77.58 per barrel, a low not seen since early June.
UK-origin Brent crude for September settled at $82.40 per barrel, down 23 cents, or 0.3%. The global crude benchmark fell 4.5% over two prior weeks, hitting a six-week low of $81.61 in the latest session.
Monday’s swoon in oil came amid heightened political uncertainty caused by Biden’s exit from the reelection race and his decision to endorse Vice President Kamala Harris as the standard bearer for the Democratic Party.
Until Biden’s decision on Sunday, markets had been betting on Republican candidate and former President Donald Trump returning to the White House in the November election. With Harris in the race now, the dynamics of the game may have changed, some analysts said.
["Biden’s decision] changes the risk calculus … if the Democrats retain the White House," Patrick De Haan, head of petroleum analysis at GasBuddy, said in comments carried by MarketWatch.
De Haan said that a win for Democrats would likely mean a generally more prohibitive stance on oil, which would likely keep prices slightly higher. However, a Trump victory would likely mean "fewer restrictions to drilling, environmental regulation, and a more pro-oil stance, which could help ease some price pressure."
With little known so far on how the election might turn, investors in oil were keeping their bets down, thus pressuring crude prices further, De Haan said.
Analysts had forecast a decline of 1.7 million barrels instead. Gasoline is the primary motor fuel in the United States and makes up the largest component of the country’s energy mix.
In distillates, the EIA reported a build of 3.454 million barrels for last week, negating the prior week’s draw of 4.884 million. Analysts had forecast a 500,000-barrel drop. Distillates are primarily processed into the diesel required by trucks, buses and ships, and also for making airplane fuel.
Notwithstanding the increases in fuel stockpiles, the EIA reported a crude inventory decline of 4.87 million barrels during the week ended July 12, adding to the prior week’s tumble of 3.443 million. US crude inventories have fallen more than 20 million barrels in all over the past three weeks.
Also weighing was weaker demand out of China, the No. 1 oil importer and second largest consumer of the commodity after the United States.
Data over the past two weeks showed China's refinery output fell 3.7% in June from a year earlier. China's economy also grew by just 4.7% in the second quarter of this year, its slowest growth since the first quarter of 2023, well below the forecast 5.1%.