Oil Losses Ease as Market Turmoil Abates After Trump Victory
Futures were little changed in New York after falling as much as 4.3% earlier. Turbulence in financial markets calmed and a knee-jerk selloff of risky assets abated as Trump, 70, promised to try to unite America’s divided political factions after his victory over Hillary Clinton. Attention on the energy market may shift to U.S. government oil inventory data later on Nov. 9.
The result nonetheless rattled markets that had banked on a continuation of economic and trade policies under a Democrat president. Most polls had shown Clinton ahead of Trump going into the vote and websites that took bets on the victor had put her odds of winning at 80% or more.
"The election doesn’t impact how much oil is being pumped or how much gasoline is being used," said John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy. "The inventory numbers will hold sway later today [Nov. 9] and the lack of OPEC cohesion will return to the forefront. After the big move overnight it’s back the fundamentals."
West Texas Intermediate for December delivery fell 12 cents to $44.86 a barrel at 9:07 a.m. on the New York Mercantile Exchange, after dropping as much as $1.91 to $43.07. Total volume traded was more than triple the 100-day average.
Brent for January settlement slipped 2 cents to $46.02 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a 54-cent premium to WTI for January delivery.
U.S crude supplies rose by 4.4 million barrels last week, the American Petroleum Institute was said to report Nov. 8. The Energy Information Administration is projected to report that stockpiles gained 2 million barrels.
Trump exceeded the 270 Electoral College votes needed to become the president-elect and the Republicans also retained control of Congress. Trump has pledged to clamp down on immigration to the U.S. and renegotiate free-trade agreements with countries including Mexico.
“The market’s first reaction to Trump’s victory is risk-off, with the liquidation of positions built up on Monday [Nov. 7] on expectations of a Clinton win,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “But Trump’s acceptance speech sounded bipartisan, pro-growth and diplomatic, so some of the negative fears have waned.”
In a special report on Nov. 7, Societe Generale SA said the election outcome wouldn’t have a profound impact on oil, while analysts at Nomura Holdings Inc. had said a Clinton victory combined with an OPEC deal could trigger sharp price rebounds.
In the longer term, the reaction in oil markets to the election result would likely take a back seat to questions over whether OPEC will be able to complete a deal to restrain output at its late-November meeting in Vienna.
Oil retreated below $45 a barrel following the Organization of Petroleum Exporting Countries’ failure to agree on output quotas for member countries on Oct. 28. The group must reach a consensus before finalizing its September deal to cut production. OPEC’s chief warned of prolonged market instability if there is no agreement to limit supply.
Other raw materials and the companies that produce them were whipsawed by Trump’s shock victory. Agricultural commodities declined while industrial metals rebounded from earlier losses and gold surged with haven assets.
