Oil futures: Crude steadies after Trump election win, dollar surge
Quantum Commodity Intelligence – Crude oil futures clawed back most of its early losses Wednesday as the market digested news of a Donald Trump win in US Presidential elections, with several push and pull factors competing as traders looked for policy clues.
Front month Jan25 ICE Brent futures were trading at $75.42/b (1745 GMT), compared to Tuesday's settle of $75.53/b, but still up around 2% on the week. That came after having touched lows $73.35/b earlier in the session as a firming dollar weighed.
At the same time Dec24 NYMEX WTI was trading at $72.01/b versus Tuesday's settle of $71.99/b.
All eyes were on the US election as Donald Trump coasted to victory. Analysts said energy will not only be impacted by direct policy but also by broader economic direction, such as trade tariffs along with the geopolitical climate.
A Trump administration is viewed as more sympathetic to the fossil fuel industry, which could lift production and boost exports over time, while he has also pledged to facilitate peace deals in the Middle East and Russia-Ukraine conflicts.
The US dollar also strengthened on the election result and oil markets wobbled after the Dollar Index topped 105 points for the first time since July, making dollar-denominated imports more expensive.
Markets also dipped in early trade after the latest inventory report from the American Petroleum Institute revealed a 3.13-million-barrel build in crude stockpiles, outpacing expectations for a build of under 2 million barrels. However, the crude build was in part offset by draws in refined products.
Later in the session, the EIA put the weekly build in commercial crude stocks at 2.1 million barrels to leave inventories at a three-month high.
OPEC
Prices had been buoyed this week by OPEC's decision to delay planned hikes, which was taken as a signal the group was willing to defend prices at the cost of market share, while tighter compliance and 'compensation cuts' are expected to curtail output further.
"An increase in supply in December would have risked triggering a decline in oil prices, even if the monthly production increase of 180,000 bpd had been small. The signal alone and the prospect of further production increases in the following months would probably have been enough to put oil prices under pressure," said Carsten Fritsch of Commerzbank.
Early production surveys showed that Iraq, the primary quota buster this year, had cut output in October but it remains above its target level once the additional compensation cuts are factored in.
Meanwhile, Saudi Aramco has cut Official Selling Prices (OSP) for crude loading in December, including a $0.50/b reduction in flagship Arab Light which was largely in line with expectations after premiums for spot Middle East barrels retreated last month.
Elsewhere, traders continued monitoring Hurricane Rafael in the Caribbean, which will likely disrupt offshore Gulf of Mexico production later this week.
