Oil prices have come under pressure as traders remain cautious ahead of the impending US presidential election results. The price of West Texas Intermediate (WTI) dipped to approximately $71.20 during Asian hours after experiencing a notable rise of over 3% on Monday, driven mainly by OPEC+’s decision to postpone its planned production increase for December.
The OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, announced on Sunday that it would extend its production cut of 2.2 million barrels per day through December 2024. This decision was rooted in concerns over weakening demand and increasing supply from outside the group, which has contributed to the current volatility in oil markets.
As the US election approaches, candidates are locked in a tight race, with both former President Donald Trump and Vice President Kamala Harris expressing confidence in their chances. Polls indicate that the two candidates are nearly tied, leading to uncertainty regarding the final outcome, which may take days to determine. Trump has indicated a willingness to contest any unfavorable results, reminiscent of the events of the 2020 election.
In China, a significant gathering of the National People’s Congress is taking place, where discussions regarding economic support measures are underway. Analysts anticipate that the approval of a stimulus package exceeding 10 trillion yuan could occur, which would have a positive impact on oil demand. As the world’s largest importer of oil, any new economic initiatives from China could buoy oil prices.
Further affecting oil market dynamics is the muted expectation of a substantial interest rate cut by the Federal Reserve in November. Although markets are projecting a modest 25 basis point reduction, which could spur economic activity, the overall impact on oil demand remains to be seen as investors assess the implications of the election results and international economic policies.
