Crude Oil price posted nearly one percent on Thursday as the market weighed how President-elect Donald Trump’s policies would affect supplies and as drillers cut output while bracing for Hurricane Rafael.
On Wednesday, the election of Republican former President Trump initially triggered a sell-off that pushed oil down more than $2 as the dollar rallied. Crude prices later pared losses to settle down by less than 1%.
Yesterday, Brent crude oil futures settled up 0.95%, at $75.63 a barrel. (WTI) crude or 0.93%, to $72.36.
Prices gained support on expectations that Trump’s incoming administration may tighten sanctions on Iran and Venezuela, said Andrew Lipow, president of Lipow Oil Associates, adding that this could take oil supply off the market.
In his first term, Trump put in place harsher sanctions on Iranian and Venezuelan oil. Those measures were briefly rolled back by the Biden administration but later reinstated.
The Federal Reserve cut interest rates by a quarter of a percentage point to 4.75% from 5% on Thursday as its policymakers began taking stock of what could become a more complex economic landscape when President-elect Donald Trump takes office next year, the dollar index retreated over half percent that could be supportive for the oil prices.
Fed Chair Jerome Powell said the results of Tuesday’s presidential election, which paved the way for a U.S. chief executive who has pledged widespread deportation of immigrants, broad-based tariffs, and tax cuts, would have no “near-term” impact on U.S. monetary policy.
Actual supply cuts also lent support. In the U.S. Gulf Coast, over 22%, or 391,214 barrels per day, of crude oil production was shut in response to Hurricane Rafael, the U.S. Bureau of Safety and Environmental Enforcement said.
The dollar index .DXY eased nearly 1% but remained near a two-week high after surging following Trump’s victory. A strong dollar makes oil more expensive for other currency holders and tends to weigh on prices.
Downward pressure also came from data showing crude oil imports in China fell 9% in October, the sixth consecutive month showing a year-on-year decline, as well as from a rise in U.S. crude inventories.
Technical Outlook – (Crude Oil Price)
Crude oil prices saw a sharp recovery from the day’s low of 5968, closing at 6129, up 0.89% from the previous close of 6075. The monthly trend has turned positive, with prices gaining over 2% but remaining volatile.
A long bullish candle formed in the last session suggests a potential upside move ahead. Technical indicators, including the 14-day RSI and 9-SMA, show positive momentum.
Key resistance stands at 6152, a break above which could lead prices toward the 6330-6480 zone. On the downside, support is positioned at 6055, with further support at 5980.
Until then, Happy Trading!
Commodity Samachar Securities
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