Oil prices rose nearly 4% on Wednesday after Trump mistakenly claimed his victory while the voting continues, and there was a massive drop in U.S. crude inventories.
Trump’s victory is seen as a boom for oil due to his support for Saudi-led oil production cuts to pursue sanctions on Iran and increase prices.
A controversial outcome and long-standing uncertainty is a risky situation for oil and markets in general. Biden’s victory could have a downward effect on prices due to his support for green policies and his softer stance against Iran.
West Texas Intermediate (WTI) CLc1 ended the session up $1.49, or 4%, at $39.15 a barrel, while Brent crude LCOc1 settled up $1.52, or 3.8%, at $41.23 a barrel.
Earnings for both indicators climbed to session highs after US crude inventories fell by 8 million barrels last week, with production shutdowns caused by Hurricane Zeta in the Gulf of Mexico.
US weekly crude oil exports fell by about 2.3 million barrels last week, down 1.2 million barrels per day. This is the biggest drop since January and production fell by 600,000 barrels to 10.5 million barrels.
Wall Street rose and the US dollar appreciated against some currencies. Because the presidential elections that are close to conclusion, but not yet finalized, allow traders to bet on a divided Senate that will keep the flow of incentives but control tax increases and regulations.
Oil prices are backed by the possibility that OPEC and its allies, including Russia, may consider delaying the planned 2 million barrels per day of increase in January considering currently applied of 7.7 million barrels cut a day.
However, further lockdown could limit increases in oil prices due to reduced demand. Italy, Norway, Hungary, England, France tightened their coronavirus restrictions.