Oil declines as traders watch US election results

November 06, 2024 (MLN): Oil fell as traders monitored the US presidential election, while an industry report indicated a rise in stockpiles.

Brent crude dropped 1.3% to $74.56 a barrel. While West Texas Intermediate crude (WTI) was at $71.1 per barrel.

Republicans have won control of US Senate, and Donald Trump leads the presidential race against Kamala Harris, although the outcome may take days to finalize.

A gauge of the US dollar advanced, weighing on most commodities, Bloomberg reported.

The outcome of the race for the White House carries the potential for significant shifts in US foreign, energy and climates policy.

If Trump were to win, curbs on Russian oil exports could be eased, while there might also be tighter sanctions on Iranian flows, according to RBC Capital Markets LLC.

Crude has been buffeted in recent weeks by shifting perceptions of risks to supplies in the Middle East, with Iran escalating its rhetoric against Israel.

In addition, the OPEC+ alliance pushed back a plan to start restoring barrels to the market for a second time. Some traders have been hedging against $100-a-barrel oil if hostilities in the Middle East ratchet up after the US election.

“US foreign policy is shaping up to be a potential factor for oil markets in the near term” over Iran, said Vivek Dhar, an analyst at Commonwealth Bank of Australia. Also, “markets now must consider whether OPEC+ will perennially be forced to push their decision to reverse their voluntary oil production cuts.”

The industry-funded American Petroleum Institute said commercial crude inventories rose by 3.1 million barrels last week, with an increase also seen at the storage hub at Cushing, Oklahoma, Bloomberg reported, citing people familiar with the figures. Official data are due later Wednesday.

On the weather front, meanwhile, hurricane Rafael was threatening about 1.7 million barrels a day of output in the US Gulf of Mexico. Chevron Corp. has shut oil and gas facilities in the area.

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