On Wednesday, 6 November, oil prices fell by more than 1% due to rising crude oil stocks in the US and amid optimistic forecasts of Donald Trump’s victory in the presidential election.
According to Enkorr, the price of Brent crude fell 90 cents, or 1.2%, to $74.63 per barrel, while the price of US WTI crude fell 82 cents, or 1.1%, to $71.17 per barrel.
Tony Sycamore, an analyst at IG Markets, noted that initial signs in favour of the Republicans contributed to the growth of the US dollar, which in turn puts pressure on oil prices, as a more expensive dollar reduces the availability of goods denominated in US currency for holders of other currencies.
In Asia on Wednesday, futures for US stocks and the dollar showed growth as investors lean towards expectations of a Trump victory. According to Sonia Kumari, commodity strategist at ANZ Research, if Trump wins, the oil market could benefit in the short term due to the likely tightening of sanctions against Iran.
Signals of weakening demand also added pressure to oil prices. Priyanka Sachdeva, senior market analyst at Phillip Nova, noted that data from the American Petroleum Institute (API) showed a significant increase in US crude oil stocks by 3.13 million barrels in the week ended 1 November, while a Reuters poll had forecast an increase of only 1.1 million barrels. Gasoline stocks decreased by 928 thousand barrels, while distillate stocks fell by 852 thousand barrels.
Thus, the oil market remains under pressure due to the rising dollar and changing investor expectations about future US policy, which may add additional volatility to the oil markets in the short term.
