Oil Markets React to U.S. Election Results, Eyeing Global Supply Impact
Image Credit: The Texas Tribune
Oil prices saw a slight increase on Thursday after a sell-off triggered by the U.S. presidential election, as concerns over potential oil supply disruptions from a Trump presidency and a developing hurricane in the Gulf Coast outweighed the impact of a stronger U.S. dollar and rising inventories.
Brent crude futures rose by 26 cents (0.35%) to $75.18 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 16 cents (0.22%) to $71.85.
Market analyst Tony Sycamore of IG noted that fears of a Trump presidency restricting oil supplies from Iran and Venezuela, along with the approaching storm, outweighed the post-election boost from a stronger U.S. dollar and higher-than-expected U.S. inventories.
While Trump's election initially caused a drop in oil prices of over $2, due to the strengthening of the U.S. dollar, the losses were later reduced. By the end of Wednesday's session, Brent crude had dropped 61 cents and WTI had fallen 30 cents.
Trump is expected to reinstate sanctions on Iranian oil under his "maximum pressure" policy, potentially cutting supply by up to 1 million barrels per day. However, analysts warn that halting Iranian oil exports to China could be challenging. Trump also imposed severe sanctions on Venezuelan oil during his first term, which were briefly eased under the Biden administration but later reinstated.
In the U.S., Hurricane Rafael intensified to a category 3 storm on Wednesday, causing about 17% of crude oil production in the U.S. Gulf of Mexico (roughly 304,418 barrels per day) to be shut down, according to the U.S. Bureau of Safety and Environmental Enforcement.
Meanwhile, U.S. crude inventories rose by 2.1 million barrels to 427.7 million barrels in the week ending November 1, surpassing expectations of a 1.1 million-barrel increase, as reported by the U.S. Energy Information Administration.
Paraphrasing text from "Reuters all rights reserved by the original author
