Brent oil drops below $75 as market reacts to election results, weather events

Oil prices are declining on November 7 afternoon, with investors keeping an eye on Hurricane Rafael and continuing to assess the results of the presidential elections and inventory data from the US.

The price of January Brent futures on the ICE Futures exchange in London has currently reached $74.30 per barrel, which is $0.62 (0.83%) lower than the previous session's close, Caliber.Az reports.

Meanwhile, December WTI oil futures on the New York Mercantile Exchange (NYMEX) have decreased by $0.79 (1.1%) to $70.90 per barrel.

Concerns over a potential Trump presidency tightening oil supply from Iran and Venezuela, coupled with the threat of an approaching storm, have outweighed the positive impact of a stronger US dollar and higher-than-expected US inventories, according to market analyst Tony Sycamore from IG.

While Trump’s election initially caused a sell-off, pushing oil prices down by more than $2 as the dollar surged to its highest level since September 2022, losses were later pared. Brent crude ended the day down 61 cents, and WTI fell 30 cents.

Priyanka Sachdeva, senior analyst at Phillip Nova, noted that Trump's pro-business policies could boost demand for fuel, but interference with Federal Reserve easing policies might pose further challenges for the oil market. She also highlighted the headwinds caused by the strong dollar.

Looking ahead, oil market gains may be limited, with OPEC expected to increase supply in January, and historical trends suggesting that sanctions will not deter China and India from continuing to import oil from Russia and Iran.

In China, crude oil imports fell 9% in October, marking the sixth consecutive month of decline, due to a plant closure and weaker demand from independent refiners.

Trump is expected to reimpose sanctions on Iranian oil, potentially reducing supply by up to 1 million barrels per day, while harsher sanctions on Venezuelan oil, which were briefly relaxed under the Biden administration, are likely to be reinstated.

Meanwhile, Hurricane Rafael, now a category 3 storm, has led to the shutdown of about 17% of US Gulf of Mexico oil production, or 304,418 barrels per day. The US Energy Information Administration also reported a rise in crude oil inventories by 2.1 million barrels to 427.7 million barrels in the week ending November 1, surpassing expectations.

By Aghakazim Guliyev