WASHINGTON, Nov 6: Oil prices dropped up to 2% on Wednesday following two days of gains, impacted by a strong dollar and increased U.S. crude stockpiles, as markets reacted to projections of a Trump victory in the U.S. presidential election. Brent crude oil futures fell by $1.17, or 1.5%, to $74.36 per barrel at 0710 GMT, while U.S. West Texas Intermediate (WTI) crude dropped $1.11, or 1.5%, to $70.88 per barrel.
The rising dollar, which makes dollar-denominated commodities more expensive for international buyers, added downward pressure on oil prices. Additionally, a Trump presidency could signal policy shifts impacting China, the world’s largest crude importer, potentially reducing demand, according to independent analyst Tina Teng.
The dollar reached its largest one-day gain since March 2020, fueled by so-called “Trump trades.” In the short term, analysts like Soni Kumari, a commodity strategist at ANZ Research, see a potential Trump presidency as bullish for oil prices due to the likelihood of renewed sanctions on Iranian oil exports.
However, the longer-term effects may be bearish, as Trump’s energy policies are likely to favor the U.S. oil and gas sector, potentially leading to increased supply and trade protectionism that could curb demand. Further weighing on oil, American Petroleum Institute data showed that U.S. crude inventories grew more than anticipated, suggesting weakening demand.
In summary, oil prices remain under pressure amid currency shifts, potential policy impacts, and demand concerns, with short- and long-term factors likely to influence future market directions.
