Oil prices rise due to approaching hurricane and Donald Trump
There is concern about a Trump presidency squeezing oil supply from Iran and Venezuela
07 November 2024 - 08:42
byColleen Howe and Gabrielle Ng
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Singapore — Oil prices rose on Thursday following a sell-off triggered by the US presidential election, as risks to oil supply from a Trump presidency and a hurricane building in the Gulf Coast outweighed a stronger US dollar and higher inventories.
Brent crude oil futures were up 65, or 0.87%, at $75.57 per barrel by 4am GMT. US West Texas Intermediate (WTI) crude gained 54c or 0.75% to $72.23.
Concerns about a Trump presidency squeezing oil supply from Iran and Venezuela as well as an approaching storm “more than offset the post-election impact of a stronger dollar and … higher-than-expected US inventories,” IG market analyst Tony Sycamore wrote in a note.
Trump’s election had initially triggered a sell-off that pushed oil prices down by more than $2 as the dollar rose to its highest level since September 2022. But the front-month contracts pared losses to settle down 61c for brent and 30c for WTI by the end of the Wednesday session.
“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,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“With the bumper surge in the dollar hovering at near four-month highs, oil seems to be talking massive headwinds in the aftermath of the US election results.”
The upside to oil markets may be limited to the short to medium term as Opec is expected to increase supply capacity in January, while historical trends do not suggest sanctions will prevent India and China from continuing to purchase oil from Russia or Iran, Sachdeva said.
Donald Trump is expected to reimpose his “maximum pressure policy” of sanctions on Iranian oil. That could cut supply by as much as 1-million barrels per day, according to an Energy Aspect estimate.
In his first term, Trump had also put in place harsher sanctions on Venezuelan oil, measures that were briefly rolled back by the Biden administration but later reinstated.
In North America, Hurricane Rafael intensified into a category 3 hurricane on Wednesday, and about 17% of crude oil production or 304,418 barrels per day in the US Gulf of Mexico had been shut in response, the US Bureau of Safety and Environmental Enforcement said.
US crude inventories rose by 2.1-million barrels to 427.7-million barrels in the week ending on November 1, the US Energy Information Administration said on Wednesday, compared with expectations for a 1.1 million-barrel rise.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil prices rise due to approaching hurricane and Donald Trump
There is concern about a Trump presidency squeezing oil supply from Iran and Venezuela
Singapore — Oil prices rose on Thursday following a sell-off triggered by the US presidential election, as risks to oil supply from a Trump presidency and a hurricane building in the Gulf Coast outweighed a stronger US dollar and higher inventories.
Brent crude oil futures were up 65, or 0.87%, at $75.57 per barrel by 4am GMT. US West Texas Intermediate (WTI) crude gained 54c or 0.75% to $72.23.
Concerns about a Trump presidency squeezing oil supply from Iran and Venezuela as well as an approaching storm “more than offset the post-election impact of a stronger dollar and … higher-than-expected US inventories,” IG market analyst Tony Sycamore wrote in a note.
Trump’s election had initially triggered a sell-off that pushed oil prices down by more than $2 as the dollar rose to its highest level since September 2022. But the front-month contracts pared losses to settle down 61c for brent and 30c for WTI by the end of the Wednesday session.
“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,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“With the bumper surge in the dollar hovering at near four-month highs, oil seems to be talking massive headwinds in the aftermath of the US election results.”
The upside to oil markets may be limited to the short to medium term as Opec is expected to increase supply capacity in January, while historical trends do not suggest sanctions will prevent India and China from continuing to purchase oil from Russia or Iran, Sachdeva said.
Donald Trump is expected to reimpose his “maximum pressure policy” of sanctions on Iranian oil. That could cut supply by as much as 1-million barrels per day, according to an Energy Aspect estimate.
In his first term, Trump had also put in place harsher sanctions on Venezuelan oil, measures that were briefly rolled back by the Biden administration but later reinstated.
In North America, Hurricane Rafael intensified into a category 3 hurricane on Wednesday, and about 17% of crude oil production or 304,418 barrels per day in the US Gulf of Mexico had been shut in response, the US Bureau of Safety and Environmental Enforcement said.
US crude inventories rose by 2.1-million barrels to 427.7-million barrels in the week ending on November 1, the US Energy Information Administration said on Wednesday, compared with expectations for a 1.1 million-barrel rise.
Reuters
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