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Oil steadies as investors digest US election fallout

Published 07/11/2024, 12:37 pm
Updated 07/11/2024, 08:59 pm
© Reuters. FILE PHOTO: A pump jack operates in an oil field in Midland, Texas U.S. August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford/File Photo
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By Colleen Howe, Gabrielle Ng and Alex Lawler

SINGAPORE/LONDON (Reuters) -Oil held steady on Thursday after a sell-off triggered by the U.S. presidential election, with a stronger dollar and lower crude imports in China balancing supply risks from a Trump presidency and output cuts caused by Hurricane Rafael.

Trump's election win initially triggered a sell-off that pushed oil down more than $2 as the dollar rallied. But crude prices later pared losses to settle at a less than 1% decline by the end of Wednesday's session.

Brent crude oil futures traded 4 cents higher at $74.96 per barrel by 0927 GMT on Thursday. U.S. West Texas Intermediate (WTI) crude slipped 12 cents to $71.57.

"Historically, Trump's policies have been pro-business, which likely supports overall economic growth and increases demand for fuel," said Priyanka Sachdeva, senior market analyst at Phillip Nova. "However, any interference in the Fed's easing policies could lead to further challenges for the oil market."

IG analyst Tony Sycamore wrote that concern over a Trump presidency potentially squeezing supply from Iran and Venezuela as well as the approaching storm more than offset the stronger dollar and higher than expected U.S. inventories.

Further downward pressure came from data showing that crude oil imports in China fell 9% in October - the sixth consecutive month showing a year-on-year decline.

Trump is expected to reimpose his "maximum pressure policy" of sanctions on Iranian oil exports. That could cut supply by as much as 1 million barrels per day (bpd), according to Energy Aspects estimates.

© Reuters. FILE PHOTO: A pump jack operates in an oil field in Midland, Texas U.S. August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford/File Photo

In his first term, Trump also put in place harsher sanctions on Venezuelan oil. Those measures were briefly rolled back by the Biden administration but later reinstated.

Actual, rather than feared, supply cuts also lent support. In the U.S. Gulf of Mexico, about 17% of crude output or 304,418 bpd has been shut because of Hurricane Rafael, the U.S. Bureau of Safety and Environmental Enforcement said.

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