By Arunima Kumar
(Reuters) -Oil prices fell 2% on Wednesday as projections that Republican Donald Trump had won the U.S. presidential election pushed the dollar higher.
Brent crude oil futures were down $1.25, or 1.65%, at $74.28 per barrel by 0953 GMT, while U.S. West Texas Intermediate (WTI) crude fell $1.25, or 1.74%, to $70.74 per barrel.
Republican Donald Trump claimed victory in the 2024 presidential contest after Fox News projected that he had defeated Democrat Kamala Harris, which would cap a stunning political comeback four years after he left the White House.
Besides the surging dollar weighing on commodity prices, a Trump presidency could see policies that may further pressure the Chinese economy, weakening oil demand in the world’s top crude importer, said independent analyst Tina Teng.
The dollar was set for its biggest one-day rise since March 2020 against major peers as so-called “Trump trades” took off.
A stronger U.S. dollar makes greenback-denominated commodities such as oil more expensive for holders of other currencies.
“A Trump presidency has a bearish spin,” UBS analyst Giovanni Staunovo said. “Tariffs would be negative for economic growth and oil demand growth.”
However, Trump could renew sanctions on Iran and Venezuela, removing barrels from the market, which would be bullish, Staunovo added. Iran exports about 1.3 million barrels per day.
“In event of a Trump victory, he has little interest in renewables and will actively encourage U.S. oil production growth,” said Panmure Liberum analyst Ashley Kelty.
“This is not so good for OPEC+ who will have to decide whether they want to protect market share or try to sustain price levels,” Kelty said.
Weakening demand signals also weighed on oil on Wednesday, said Phillip Nova senior market analyst Priyanka Sachdeva in a note, after data from the American Petroleum Institute data showed U.S. crude inventories grew more than forecast.
Crude oil stocks rose by 3.13 million barrels in the week ended Nov. 1, market sources said citing American Petroleum Institute figures, higher than a 1.1 million barrel build-up projected in a Reuters poll.
Meanwhile, oil and gas producers in the U.S. Gulf of Mexico began shutting output as Tropical Storm Rafael is forecast to become a Category 1 hurricane by early Wednesday.
(Reporting by Arunima Kumar in Bengaluru Katya Golubkova in Tokyo and Emily Chow in Singapore; Editing by Christian Schmollinger, Jacqueline Wong and Jan Harvey)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.