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Oil fell as U.S. election uncertainty dominates markets

by Bunkerist
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Oil prices plummeted on Thursday as Biden approaches the White House, but doubts remain about greater incentives to support the economy in the face of the coronavirus crisis.

Brent crude fell 17 cents, or 0.4%, to $41.06 a barrel by 1135 GMT and West Texas Intermediate (WTI) crude was down 28 cents, or 0.7%, at $38.87.

Both benchmarks had jumped about 4% on Wednesday.

While Biden awaited victory after winning two critical US states, the Republicans demanded a recount. The legal battle process over the results can lead to additional uncertainty in the market and more sales in risky asset classes.

The Republicans’ victory will likely result in more upsurges for oil price than for the Democrats. Otherwise, the Paris climate agreement will be welcomed again and the attitude towards Iran will soften. In this case, the global oil supply may increase and prices fall further.

The current vote count and trends show that Republicans are ready to retain control of the US Senate, while Democrats will have a weak majority in the House of Representatives.

A divided Congress could thwart Biden’s plans for climate change, economic stimulus, and easing sanctions against oil producer Iran.

The oil volatility will continue due to the sentiment to the US dollar and the US dollar will likely remain volatile for at least the next few days until the election is finalized.

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