Oil reverses most losses after Trump’s shock win
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