Oil slips as investors digest US election fallout
Oil slipped on Thursday, extending a sell-off triggered by the U.S. presidential election, as a strong dollar and lower crude imports in China outweighed supply risks from a Trump presidency and output cuts caused by Hurricane Rafael.
Donald Trump’s election win initially triggered a sell-off that pushed oil down more than $2 as the dollar rallied. But crude prices later pared losses to settle at a less than 1% decline by the end of Wednesday’s session.
Brent crude oil futures fell 57 cents, or 0.76%, to $74.35 a barrel by 7:52 a.m. ET on Thursday. U.S. West Texas Intermediate (WTI) crude slipped 73 cents, or 1.02%, to $70.96.
Downside factors include a strong dollar and sluggish demand, while upside pressures come from potentially increased sanctions on Iran and Venezuela under Trump, as well as conflict in the Middle East, said Saxo Bank analyst Ole Hansen.
“Some of these potential drivers will have no impact in the foreseeable future, but they all add up to the current narrative leading to rangebound trading,” he said.
“Absent any major geopolitical escalation, the short-term outlook leans toward downside risk in my opinion.”
The dollar held near four-month highs on Thursday as investors prepared for several central bank decisions, including from the U.S. Federal Reserve. A strong dollar makes oil more expensive for other currency holders and tends to weigh on prices.(cay)
Source: CNBC
