Oil Slips as Trump Victory Sparks Market Uncertainty

by Bloomberg

Mia Gindis, Devika Krishna Kumar and Maggie Eastla

Wednesday, November 06, 2024 | 4:50 PM EST

Oil edged lower after fluctuating for most of the session as traders wrestled with the potential market effects of Donald Trump’s election win.

West Texas Intermediate settled about 0.4% lower near $72 a barrel, and Brent settled slightly below $75. Crude initially tumbled as much as 3.1% as Trump’s victory lifted the dollar, then pared losses on speculation that the incoming administration may escalate the conflict in the Middle East or impose stricter sanctions on Iran. Oil’s disjointed moves contrast with other markets, with gold and copper plunging and equities soaring to all-time highs.

“Crude is the one asset class without a clear direction following a Trump victory,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group.

Yet prices are getting some support from renewed concerns about Middle East stability “and the potential for supply disruptions if Trump successfully enforces sanctions on Iranian oil exports,” she added.

In 2019, Trump led a maximum pressure campaign to choke off Iran’s oil exports. The market is mulling whether he will draw another hard line, potentially disrupting about 1.3 million barrels a day of Iranian crude, according to a Rapidan Energy Group estimate.

A gauge of near-term volatility in oil markets remains elevated near the highest levels in a year.

Physical indicators are also mixed. US government figures out Wednesday showed bearish buildups in oil, gasoline and distillate stockpiles, adding to concerns of a supply glut.

At the same time, Hurricane Rafael threatens to curtail US Gulf oil production by roughly 1.6 million barrels a day. Chevron Corp. on Tuesday shut in its production in the US Gulf while Shell Plc was evacuating some non-essential personnel in the area.

Crude is down more than 10% since early June on expectations of lackluster demand in China, the world’s biggest oil importer, and rising supplies from the Americas. The oil market has a number of key events on the horizon, including a meeting of China’s top legislative body and a looming Fed rate cut decision later this week.

Oil Prices:

WTI for December delivery fell 0.4% to settle at $71.69 a barrel.
Brent for January settlement shed 0.8% to settle at $74.92 a barrel.

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