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Oil prices rise as investors look for signs U.S. rate cuts to begin

Oil prices surged in early trade on Monday as investors hunt for evidence of a rate-cut cycle that may begin as soon as September.

Brent crude prices increased 48 cents (0.57%) to $83.10 per barrel at 0035 GMT, while U.S. West Texas Intermediate crude futures rose 42 cents (0.52%) to $80.55.


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“Since the June FOMC meeting, inflation and labor market data have signaled that disinflation and labor market rebalancing are in place, which we expect will allow the Fed to begin its interest rate cutting cycle in September,” according to a report from ANZ Research.

The United States Federal Reserve will convene its next Federal Open Market Committee (FOMC) meeting on interest rates on July 30-31, during which investors expect the Fed to leave rates constant while watching for any indication of a decrease later in the year.

On the political front, U.S. President Joe Biden dropped his reelection campaign on Sunday due to pressure from other Democrats and supported Vice President Kamala Harris as the party’s nominee to challenge Republican Donald Trump in November.

China’s slower-than-expected economic growth of 4.7% in the second quarter raised fears last week about the country’s oil consumption, which continues to weigh on prices.

On Sunday, China unveiled a strategy statement listing stated aspirations, ranging from growing innovative industries to enhancing the business climate, but analysts see little signs of imminent fundamental reforms in the world’s second-largest economy.

The 60-point paper was published following last week’s closed-door meeting of the Communist Party’s Central Committee, which occurs every five years.

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