Oil Prices Fall as Trump Inches Toward Victory

Crude oil prices trended lower in midmorning Asian trade today, pressured by the first results from the U.S. elections and the latest weekly U.S. oil inventory report from the American Petroleum Institute.

At the time of writing, Brent crude was trading at $73.68 per barrel, with West Texas Intermediate at $70.26 per barrel. Both were down by over 2.4% from the market’s opening.

“The initial signs have been favourable for the Republicans and while it’s still early days, U.S. yields and the U.S. dollar are both trading higher,” IG analyst Tony Sycamore told Reuters. “This in turn is weighing on the crude oil price which has had a good run in recent sessions,” he added.

“US foreign policy is shaping up to be a potential factor for oil markets in the near term,” especially with regard to Iran, Commonwealth Bank of Australia analyst Vivek Dhar told Bloomberg. He added that “markets now must consider whether OPEC+ will perennially be forced to push their decision to reverse their voluntary oil production cuts.”

“If Trump wins, it is bullish for the oil market in the short-term due to prospects of tighter sanctions on Iranian oil,” ANZ Research analyst Soni Kumari told Reuters.

Bloomberg meanwhile reported that oil traders are piling into bullish bets in case of a spike in Middle Eastern tensions that could lead to much higher oil prices. The report cited data showing that on Monday alone, some 10 million barrels worth of call options for December were traded at a price spread of $90/$100 per barrel. The expiry date for the contracts is November 15.

The Monday trade volume is an extension of a rather bullish October: interest in call options on higher oil prices reached a record high last month, per Bloomberg, which also noted that even after the price retreat following Israel’s retaliatory strike against Iran, premiums on call options versus put options remain at the highest since Russia’s invasion in the Ukraine in February 2022.

By Irina Slav for Oilprice.com

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