Oil prices swung after an assassination attempt on Republican presidential candidate Donald Trump brought political risks into sharp focus, and as China's ruling Communist Party kicked off its third congress on Monday.
Brent crude traded above $85 a barrel, reversing slight losses at the start of trading today, while West Texas Intermediate crude exceeded $82 a barrel.
The attack on the former US president has injected an additional dose of uncertainty into the US election race. The dollar has moved modestly higher, making commodities, including oil, priced in non-US currencies more expensive for most buyers.
Oil prices remain strong this year, supported by production cuts by the OPEC+ alliance and increased fuel demand during the northern hemisphere summer.
Markets are closely watching this week's Third National Congress of the Chinese Communist Party, which will set the country's economic and political priorities, for clues about the growth trajectory of the world's largest crude oil importer.
China’s appetite for crude oil shrank in the first six months of the year, raising concerns about demand. The country’s gross domestic product growth fell at its slowest pace in five quarters. The International Energy Agency says China’s slowdown is likely to weigh on global oil consumption growth.
Warren Patterson, head of commodity strategy at ING Group NV, said it was no surprise that after the assassination attempt on former President Donald Trump over the weekend, the US dollar would strengthen further, which could weigh on oil. In addition, the market is also leaning towards the idea that Chinese oil demand could be disappointing this year.
Despite this, options contracts point to strong demand for oil in the near term, as the price premium between two consecutive Brent crude contracts has remained on an upward trend, with the premium of the nearest contract to the next contract reaching 97 cents a barrel, about double what it was a month ago.
