Oil prices continue to rise; election uncertainty, economic cues in focus

Investing.com -- Oil prices edged higher Tuesday, continuing recent gains, with traders now seeking more cues from the U.S. presidential election and a top political meeting in China. 

At 08:00 ET (13:00 GMT), Brent oil futures climbed 0.5% to $75.45 a barrel, while West Texas Intermediate crude futures rose 0.5% to $71.85 a barrel. 

Oil shot up on Monday (NASDAQ:MNDY ), posting gains of around 2%, after the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, delayed plans to increase production this year, presenting a tighter outlook for markets.

But despite recent gains, oil still remained close to near three-year lows hit earlier in the year, as markets remained on edge over slowing demand, especially in top importer China. 

Heightened tensions in the Middle East also offered limited support to crude, as Iran reportedly prepared to launch a missile strike against Israel. Israel was also seen maintaining its offensive against Hamas and Hezbollah.  China NPC meeting in focus for more stimulus cues 

The Standing Committee of China’s National People’s Congress - the country’s most powerful political body - kicked off a four-day meeting on Monday.

The NPC is expected to approve more fiscal spending by the government, especially after Beijing outlined a slew of fiscal measures aimed at supporting growth. 

But China had not provided cues on the size or scale of the planned measures, given that only the NPC can approve increased fiscal spending. Recent reports said the country could approve about $1.4 trillion in increased debt over the coming years.

Any signs of concrete stimulus measures in China are likely to support oil markets, given that the country is the world’s biggest crude importer. Concerns over slowing demand in China have been a key weight on oil prices. US elections, Fed meeting awaited 

Markets were also awaiting more cues from the U.S. as the country heads into a tightly contested presidential election on Tuesday. Recent polls showed Donald Trump and Kamala Harris largely neck-and-neck, with a clear outcome appearing uncertain.

After the elections, focus this week is also on a Federal Reserve meeting , where the central bank is widely expected to cut interest rates by 25 basis points.

The elections and the Fed meeting are set to offer more cues on the world’s biggest fuel consumer, especially with demand set to cool heading into the winter season.  Oil hedging activity hits record 

These massive macro events have resulted in investors ramping up oil futures and options trading in October to record levels in a bid to hedge growing uncertainty.

Hedging can help producers reduce risk and protect their production from sharp moves in the market by locking in a price for the oil. It can also give traders opportunities to profit in times of volatility. 

Some 68.44 million barrels of oil in futures and options were traded in October, according to data from the Intercontinental Exchange (NYSE:ICE ), surpassing the monthly record hit in March 2020 when Brent futures plummeted roughly $30 per barrel as the COVID-19 pandemic crushed global oil demand. 

CME Group (NASDAQ:CME ), meanwhile, reported a single day volume record for weekly crude oil options on Oct. 18, with 58,132 contracts traded. 

(Ambar Warrick contributed to this article.)

Source: Investing.com