What impact will the US presidential election have on the oil market?
The oil bulls are struggling to hold their own on the trading floor, so oil prices will remain low. New impetus should come with the US elections on November 3rd. Democrat Joe Biden wants the US energy sector to stop emitting carbon by 2035.
Oil prices tied the previous day’s losses in early Thursday, October 29,2020, trading after the Department of Energy data undermined their fragile framework of stability yesterday. Contrary to the API data from Tuesday, gasoline stocks recorded a significant increase of 1.9 million barrels (API: -1.6 million barrels), the US Department of Energy announced.
The US election for the next President of America will be held on November 3. From the Republican Party, the current president of the country, Donald Trump, is participating in the race, from the Democratic Party – former Vice President Joe Biden.
It stands to reason that the nuclear agreement with Iran, unilaterally terminated by Trump, will be revived. If that were the case, Iran could return to the world market as an oil exporter, which would also increase the oil supply.
Experts see the oil price on a downward trajectory if there is a change in power. OPEC + would then counter this with further reductions in production volumes, which in the past ensured stability in the price landscape.
The result of the US presidential election, whatever they may be, will not have a long-term impact on the oil market. According to experts, the second wave of the Coronavirus pandemic is much more important and significant.
Traditionally, Democrats and Republicans are considered to have different views on US energy policy. At the same time, the country is the largest in the world, in terms of oil and gas production. And the development of its oil and gas industry has a direct impact on global markets.
Ole Hansen, head of commodity strategy at Saxo Bank, believes that regardless of the election results, the outcome will have only a short-term and limited impact on the market. He also believes that the focus will remain on the problems associated with the pandemic and the lack of a vaccine.
The rapid spread of the corona virus remains the dominant topic on the oil exchanges and financial markets. New record highs in the number of newly infected people are hampering global economic growth.
Andrei Kochetkov, a leading analyst at Otkritie Broker for global research, commented:
“At the moment, oil prices almost do not depend on who will become the head of the White House in the United States. The current situation in oil prices is driven by global demand, which is suffering from restrictive measures amid the COVID-19 pandemic. As well as the policy of key producers who were able to agree to cut production.”
Other analysts also believe that the market does not care about the US elections.
Alexey Gromov, Chief Director for Energy at the Institute of Energy and Finance (IEF), says:
“This spring, when the OPEC + deal was just restarted again, it was assumed that the oil market would start to grow in the last quarters of 2020. That is, it was assumed that the pandemic would kind of die by itself in the summer. But, unfortunately, we see that a pessimistic scenario is being realized today.”
Fuel demand is an important economic indicator, which is why gasoline builds and lower refinery utilization rekindled economic worries among market participants, sending the price of American crude below $40 yesterday afternoon. In the morning, West Texas Intermediate (WTI) crude oil futures fell another 23 cents to $ 39.78 a barrel. The Brent crude oil futures were down 21 cents to $41.52 a barrel.
Alexey Gromov believes that the situation related to the recovery of the global economy from the consequences of the pandemic will have a long-term impact on oil prices, but not the US presidential election.