Oil Prices Rebound Amidst Uncertainty Post-US Election
Amidst the aftermath of the US presidential election, oil prices saw a slight uptick on Thursday as concerns over potential supply disruptions under a Trump presidency and a looming hurricane in the Gulf Coast outweighed other factors like a stronger dollar and decreased crude imports in China.
Brent crude oil futures rose by 0.39 percent to $75.21 per barrel, while US West Texas Intermediate crude saw a 0.25 percent increase to $71.87 by 10:00 a.m. Saudi time.
Market analyst Tony Sycamore noted that worries about potential oil supply constraints from Iran and Venezuela under a Trump administration, coupled with an approaching storm, overshadowed the impact of a stronger US dollar and higher US inventories.
Initially, Trump’s election had led to a sell-off that drove oil prices down by over $2, with the US dollar reaching its highest level since September 2022. However, prices recovered slightly by the end of the Wednesday session.
While Trump’s pro-business policies could boost economic growth and fuel demand, any interference in Federal Reserve policies could pose challenges for the oil market, according to senior market analyst Priyanka Sachdeva.
Looking ahead, OPEC is expected to ramp up supply capacity in January, potentially limiting the upside for oil markets in the short to medium term. Additionally, historical trends suggest that sanctions may not deter countries like India and China from continuing to buy oil from Russia or Iran.
Meanwhile, China, the world’s largest crude importer, saw a 9 percent drop in crude oil imports in October, marking the sixth consecutive monthly decline due to a refinery closure and weaker demand from independent refiners.
Trump is anticipated to reintroduce sanctions on Iranian oil under his “maximum pressure policy,” which could slash supply by up to 1 million barrels per day. The hurricane in North America, Hurricane Rafael, intensified into a category 3 storm, leading to the shutdown of about 17 percent of crude oil production in the US Gulf of Mexico.
US crude inventories also saw an increase of 2.1 million barrels in the week ending on Nov. 1, reaching 427.7 million barrels, surpassing expectations of a 1.1 million-barrel rise as reported by the US Energy Information Administration.