Oil re­verses most losses af­ter Trump’s shock win

Kuwait Times - - BUSINESS -

Oil re­versed most of its early losses of al­most 4 per­cent to trade near $46 a bar­rel yes­ter­day, as the mar­ket re­cov­ered from an ini­tial Brexit-like re­ac­tion to Don­ald Trump’s sur­prise vic­tory in the U.S. pres­i­den­tial elec­tion.

The re­sult sparked a flight from risky as­sets in a move an­a­lysts com­pared to June’s ref­er­en­dum in which Bri­tons voted to leave the Euro­pean Union. But the dol­lar and Euro­pean stocks pared losses, with traders cit­ing what some saw as a con­cil­ia­tory speech by Trump fol­low­ing his win.

Brent crude was down 15 cents at $45.89 a bar­rel by 1220 GMT, af­ter fall­ing to $44.40, the low­est since Aug. 11. US crude was down 30 cents to $44.68.

Oil an­a­lysts said while Trump’s vic­tory raised con­cerns about fu­ture eco­nomic growth and oil de­mand, there were sup­port­ive fac­tors for prices such as a po­ten­tial shift in U.S. pol­icy to­wards Iran.

“There are a lot of un­knowns about what will be the Trump po­si­tion in the geopol­i­tics of the Mid­dle East,” said Olivier Jakob, an­a­lyst at con­sul­tancy Petro­ma­trix. “Pres­i­dent Obama from the start of his elec­tion worked to­wards a de­tente with Iran and we can’t be sure that Pres­i­dent Trump will con­tinue in the same di­rec­tion.”

Trump has crit­i­cised the West’s nu­clear deal with Iran, an ac­cord that has al­lowed Tehran to in­crease crude ex­ports sharply this year. Iran on Wed­nes­day said Trump should stay com­mit­ted to the deal. Oil prices are less than half of their level of mid-2014, pres­sured by ex­cess sup­plies. Other an­a­lysts cited bear­ish im­pacts from the elec­tion re­sult.

Daniel Yer­gin, vice-chair­man of anal­y­sis firm IHS Markit and au­thor of The Prize, a well-known his­tory of the oil in­dus­try, said it could com­pound sup­ply-side head­winds with de­mand con­cerns. —Reuters

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