Oil Prices React To US Presidential Election

The early signs were favorable for Republicans.

Oil prices fell more than 1% on Wednesday as the dollar strengthened amid market bets on a possible victory for Republican Donald Trump in the US presidential election.

This has been reported by Reuters.

Brent crude oil futures were down $1.00, or 1.32%, at $74.53 per barrel by 1040 GMT, while U.S. West Texas Intermediate (WTI) crude fell 93 cents, or 1.29%, to $71.06 per barrel.

“The early signs have been favourable for the Republicans and while it’s too early to draw conclusions, US bond yields and the US dollar are both rising,” said IG Markets analyst Tony Sycamore. “This in turn is weighing on the oil price, which has been on a rise of late.”

US stock futures and the dollar rose in Asia on Wednesday as investors leaned towards a Trump victory. A stronger US dollar makes dollar-denominated commodities such as oil more expensive for holders of other currencies, which in turn dampens demand.

“If Trump wins, it could support the oil market in the short term due to the possibility of increased sanctions on Iranian oil,” said Soni Kumari, commodities strategist at ANZ Research.

However, it could be counterproductive in the long term as Trump’s policies will boost the US oil and gas industry and trade protectionism could dampen demand, she added.

Weakening demand signals also weighed on oil on Wednesday, said Phillip Nova senior market analyst Priyanka Sachdeva in a note, after data from the American Petroleum Institute data showed U.S. crude inventories grew more than forecast.

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