West Texas Intermediate (WTI) crude oil has seen a slight decline, trading around $71.45 during Thursday’s session in Asia. The downward movement in WTI prices is primarily attributed to the strengthening of the US Dollar, which gained momentum following the recent election of Donald Trump as the Republican candidate for the upcoming presidential race. As a result, the US Dollar Index (DXY), which measures the currency against a basket of others, surged to its highest point since July, reaching around 105.44 before settling at approximately 105.20.
The implications of Trump’s potential re-election extend beyond immediate market reactions. Analysts suggest that renewed sanctions on oil-producing countries like Iran and Venezuela could lead to increased market tightness. This scenario may create upward pressure on WTI prices despite the current bearish sentiment. The situation surrounding crude oil supplies remains complex, and while short-term risks may exist regarding Iran’s oil contributions, potential supply disruptions could support higher prices in the long run.
Adding to the mix of factors influencing crude oil prices, the latest data from the Energy Information Administration (EIA) revealed that US crude inventories unexpectedly rose last week. Specifically, there was an increase of 2.149 million barrels for the week ending November 1, contrasting with a reduction of 0.515 million barrels reported the previous week. The surge was significantly above market expectations, which had anticipated a rise of only 1.8 million barrels. The increase in stockpiles could further dampen the bullish outlook on prices as traders assess the implications of supply levels along with movements in the dollar value.
