Oil Steadies After Election Jolt as Traders Weigh Trump’s Impact
Oil lacked direction after a roller-coaster session on Wednesday as traders weighed the likely impact of Donald Trump’s election victory on the crude market, with the US dollar halting a post-vote surge.
Global benchmark Brent traded around $75 a barrel after swinging in a more-than-$2 arc in the previous session to end slightly lower, while West Texas Intermediate was near $71. Trump’s election as US president spurred the biggest jump in the dollar since September 2022, pressuring commodities.
Crude has been largely swinging around current levels for the last six weeks, even in the face of a host of conflicting factors. A bumper bout of volatility spurred by tensions in the Middle East last month failed to shake prices out of their recent range. Top trader Vitol Group said that while the market looks slightly bearish next year, it’s too early to be certain there will be an oversupply.
“There’s clearly a little bit of concern around the balances for 2025; that’s what’s driving the market,” Russell Hardy, chief executive officer of the trading giant, said at the FT Commodities Asia Summit in Singapore, noting scope for supply growth in the US, Guyana and Brazil.
Still, the market is “not in bad shape,” he added, with crude and some petroleum products still in the bullish backwardation structure, when closer-dated futures trade at a premium to further-out contracts in a sign of strong demand.
Trump’s victory is set to shake up US energy and environmental policy, and there’s likely to be sweeping implications for oil production, offshore wind development, and electric vehicle sales. Citigroup Inc. said the win was net bearish for crude’s outlook on prospects for higher supply, as well as fresh trade tariffs on China that may may further crimp growth.
“There are several opposing forces,” said Warren Patterson, head of commodities strategy at ING Groep NV. “On the bullish side, you have the potential for stricter enforcement of sanctions against Iran and more upside to 2025 US GDP growth. However, USD strength, and the prospects for an increase in oil-and-gas leasing on federal lands is more bearish.”
On the weather front, Hurricane Rafael slammed Cuba with Category 3 winds, although the system is expected to weaken before reaching the US coast around the Gulf of Mexico. The threat to oil production has fallen to about 1.55 million barrels a day as the storm’s direction shifted eastward.
Brent for January settlement dipped 0.6% to $74.47 a barrel at 10:40 a.m. in London.
WTI for December delivery was 0.8% lower at $71.09 a barrel.
Source : Bloomberg
