Oil prices slipped on Thursday as the chances of Joe Biden, the Democratic Party presidential candidate in the U.S, brightened in a nerve-racking race for the White House although Republicans seem to be in a better position to retain Senate control, limiting the possibility of any significant COVID-19 stimulus package.
U.S West Texas Intermediate (WTI) crude futures dipped by 27 cents, or 0.69%, to $38.51 a barrel at 10:51 West Africa Time, just as Brent crude futures weakened by 21 cents, or 0.51%, to $41.02 per barrel. The two benchmarks rose by around 4% on Wednesday.
Bonny Light, Nigeria’s chief oil grade, added $1.45 or 3.74% at $40.26 at the previous session.
Biden foretold an election triumph over President Donald Trump following crucial wins in Wisconsin and Michigan as Trump to offset slim chances of a second term through arbitration and a request for recount.
“The next few weeks could be quite tumultuous with looming court challenges and recounts,” analysts at RBC Capital Markets wrote in a note seen by Reuters.
Ongoing counting of votes and patterns point to the certainty of Republicans to retain dominance of the United States Senate, while the Democrats will scrape a slight majority in the House of Representatives.
A Congress divided against itself will potentially hinder Biden from making key decisions like confronting climate change or relaxing penalties on oil producer Iran.
Stephen Innes, chief market strategist at Axi, said “fortunately for oil markets, it would seem any olive branch to Iran will not be extended anytime soon.”
Pundits at RBC expect Iran to return around a million barrels per day (bpd) of exports back to the market by the second half of next year should Biden win.
S&P Global Platts analysts do not envisage a significant supply of Iranian oil prior to 2022 whether election results tilt in the way of Trump or Biden.
On Wednesday, oil prices rose on anticipation that the Organisation of the Petroleum Exporting Countries (OPEC) and its Russia-led allies, a cartel called OPEC+, would call off plans to restore 2 million bpd of supply in January in light off slump in demand following new coronavirus-induced lockdowns.
“The volatility in oil will remain because of its sensitivity to the U.S dollar. And the U.S. dollar will remain volatile for at least the next few days as the U.S. election still has to be worked out,” Vivek Dhar, analyst at Commonwealth Bank commodities, said. (The Eye Witness)