- Crude oil falls more than 3% after the result of the US presidential election.
- Tropical Storm Rafael’s impact on the Gulf fades as Trump secures new term as US president
- The US Dollar Index rises steadily and gains almost 2% on Wednesday.
Crude oil is down, falling almost 3% on Wednesday following the outcome of the US presidential election, which favored former President Donald Trump. One of Trump’s promises in the pre-election campaign was to support and open more oil drilling to become a larger net producer. This would create another imbalance in the markets between supply and demand, with oil prices likely trading below current levels.
The US Dollar Index (DXY), which tracks the performance of the Dollar against six other currencies, rises and gains almost 2% on Wednesday, not only because Donald Trump has secured a new term. The fact that Republicans have a chance to control the House of Representatives after gaining control of the Senate means that Trump would have full control of the decision-making system and could implement various packages, reforms and tariffs without problems.
At the time of writing, Crude Oil (WTI) is trading at $69.86 and Brent Crude is trading at $73.55.
News about Oil and the markets: Crude is moved by assumptions
- Tropical Storm Rafael is on a path that could intersect with the BP, Shell, Occidental and Chevron platforms in the US Gulf region in the next five days, according to data from the Bureau of Ocean Energy Management and the National Hurricane Center. Bloomberg estimates that approximately 1.7 million barrels would be removed from daily production.
- Russian data shows that crude oil production in October was almost in line with its target under the OPEC+ deal, according to people familiar with the Energy Ministry figures, Bloomberg reports.
- Saudi Arabia lowered its oil prices for buyers in Asia for December after members of the OPEC+ producer group said on Sunday they will delay production increases for a month, Reuters reports.
- At 15:30 GMT, the Energy Information Administration (EIA) will publish its weekly crude oil report for the week ending November 1. A build of 1.8 million barrels is expected compared to the previous reduction of 0.515 million barrels.
Oil Technical Analysis: If the US pumps more, OPEC faces problems
Crude oil prices are falling on Wednesday since former US President Donald Trump emerged as the winner of the US presidential election. At one of his latest rallies, Trump confirmed that he wants to boost drilling and mining in the US again. That would mean more oil supply hitting the markets and creating another imbalance, with more supply than available demand.
To the upside, the important technical level at $74.30, with the 100-day SMA and some key lines, is the next major hurdle ahead. The 200-day SMA at $76.85 is still quite far away, although it could be tested should tensions arise in the Middle East.
The 55-day SMA at $70.87 has lost control of the situation and is no longer supporting prices that have deviated too far. Traders should look much lower at $67.12, a level that supported the price in May and June 2023. Should that level be broken, the 2024 cumulative low emerges at $64.75, followed by $64.38, the 2023 low.
US WTI Crude Oil: Daily Chart
WTI Oil FAQs
WTI oil is a type of crude oil that is sold in international markets. WTI stands for West Texas Intermediate, one of the three main types that include Brent and Dubai crude. WTI is also known as “light” and “sweet” for its relatively low gravity and sulfur content, respectively. It is considered a high-quality oil that is easily refined. It is sourced in the United States and distributed through the Cushing facility, considered “the pipeline junction of the world.” It is a benchmark for the oil market and the price of WTI is frequently quoted in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of increased demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter supply and impact prices. The decisions of OPEC, a group of large oil-producing countries, is another key price factor. The value of the US Dollar influences the price of WTI crude oil, as oil is primarily traded in US dollars, so a weaker Dollar can make oil more affordable and vice versa.
Weekly oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data shows a decline in inventories, it may indicate an increase in demand, which would drive up the price of oil. An increase in inventories can reflect an increase in supply, which drives down prices. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, with a difference of 1% between them 75% of the time. EIA data is considered more reliable since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide member countries’ production quotas at biannual meetings. Their decisions often influence WTI oil prices. When OPEC decides to reduce quotas, it can restrict supply and drive up oil prices. When OPEC increases production, the opposite effect occurs. OPEC+ is an expanded group that includes ten other non-OPEC member countries, including Russia.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
