Oil prices fell more than 1% on Wednesday as the dollar strengthened on expectations that the US presidential election could swing in favour of Republican Donald Trump and as US crude stockpiles rose more than expected.
Brent crude futures were last down 90 cents, or 1.2%, at $74.63 a barrel by 0450 GMT. WTI crude was down 82 cents, or 1.1%, at $71.17 a barrel.
Early signs are positive for Republicans, and while it is still early, US yields and the US dollar are both trading higher, weighing on the price of crude, which has performed well in recent sessions.
A stronger US dollar makes dollar-denominated commodities such as oil more expensive for holders of other currencies, which in turn dampens demand.
Trump was leading the US presidential election on Tuesday with 211 Electoral College votes compared to Harris’ 145, with a third of the votes counted. But the outcome of the race remains uncertain and the crucial battleground states are unlikely to be announced for hours or even days.
US stock futures and the dollar rose in Asia on Wednesday as investors leaned towards a Trump win.
In the short term, oil is bullish on the prospect of tougher sanctions on Iranian oil if Trump wins. But in the long term, it could be bearish as Trump’s policies will boost the US oil and gas industry and trade protectionism could lead to weaker demand.
In addition, signals of weakening demand weighed on oil prices on Wednesday. Data from the American Petroleum Institute (API) showed US crude inventories rose more than forecast.
Market sources, citing figures from the American Petroleum Institute, said US crude inventories rose by 3.13 million barrels in the week ending November 1. That’s up from a survey estimate of 1.1 million barrels.
Gasoline stocks fell by 928,000 barrels, broadly in line with the survey, and distillate stocks fell by 852,000 barrels, the sources said.
