Oil futures: Crude prices rebound, investors assess Trump impact

Quantum Commodity Intelligence – Crude oil futures Thursday were nudging higher, as benchmarks continued to claw back the initial losses following Donald Trump's election victory.

Front-month Jan25 ICE Brent futures were trading at $75.46/b (1720 GMT), compared to Wednesday's settle of $74.92/b, as rebounded from earlier lows on growing expectations during the day that the US Federal Reserve was set to cut interest rates by 25 basis points.

At the same time Dec24 NYMEX WTI was trading at $72.15/b versus Wednesday's settle of $71.69/b.

Both markets were up around $1.50/b from the day's lows.

While a Trump administration is viewed as the more pro-fossil fuel compared to Democrats, oil prices moved lower as results came in, pressured by the possibility of a tariff-related global trade war and adding to an already sluggish market outlook for 2025.

"President-elect Trump has proposed a 10% across-the-board tariff on America's trading partners with a 60% tariff levied on China. If these tariffs would impart a modest stagflationary shock to the US economy in 2025," said Wells Fargo bank in its latest report.

Commodities also took a hit as the US dollar also strengthened on the election result, lifting the Dollar Index above 105 points for the first time since July, although has since eased back slightly.

Risk

The election result was seen as potentially impacting the geopolitical risk premium, although on the flipside analysts expect a clampdown on Iranian crude sales.

"The geopolitical landscape will also attract close attention, especially the US-Russia relations, the Russia-Ukraine war, and the Middle East, where a Trump administration may tighten sanctions on Iranian oil flows," said Ole S Hansen, Head of Commodity Strategy at Saxo Group.

Back to fundamentals, crude markets have found some support in the first week of November from the uplift in refining margins, particularly the improved outlook for gasoil and jet.

"Diesel and jet cracks have risen sharply since early October, with Asian FOB premia having followed suit, now mirrored by Europe, the US and West Africa," analysts at Sparta Commodities said, although noting that fuel oil has generally softened over the past few days.