December 23, 2024

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Oil Prices Stabilize Following Post-Election Selloff

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Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Oil Prices Stabilize Following Post-Election Selloff

Crude oil prices bounced back in early Asian trading, following a post-election selloff, before stabilizing and trading flat. Yesterday’s selloff was sparked by the news that Donald Trump has won the U.S. presidential election, with the Republicans also winning control of the Senate and, likely, the House of Representatives.

At the time of writing, Brent crude was trading just under $75 per barrel and West Texas Intermediate was changing hands at $71.63 per barrel, both up from Wednesday.

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“Historically, Trump’s policies have been pro-business, which likely supports overall economic growth and increases demand for fuel. However, any interference in the Fed’s easing policies could lead to further challenges for the oil market,” Phillip Nova analyst Priyanka Sachdeva told Reuters.

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“There are several opposing forces,” Warren Patterson, ING’s head of commodity strategies said, as quoted by Bloomberg. “On the bullish side, you have the potential for stricter enforcement of sanctions against Iran and more upside to 2025 US GDP growth. However, USD strength, and the prospects for an increase in oil-and-gas leasing on federal lands is more bearish.”

Indeed, there are already reports that stricter enforcement of U.S. sanctions against Iran under Trump could deprive China of the cheap Iranian oil it has developed a fondness for in recent years. That would be bullish for prices overall unless OPEC begins to roll back its supply cuts. Some analysts appear to expect this to happen, just like they expected it to happen in December.

It did not happen, however, because the rollback has always been dependent on the price environment, with OPEC+ making it abundantly clear it would not bring back supply in a market featuring depressed benchmark prices.

In short-term price factors, what started as storm Rafael has developed into a Category 3 hurricane and over 300,000 bpd in Gulf of Mexico oil production has been shut in. This would support prices in the next couple of days or so but no longer than that.

By Irina Slav for Oilprice.com

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Source: https://oilprice.com/