Crude oil futures were lower in mid-morning Asian trade Nov. 6 amid a stronger dollar as the complex remains vulnerable to broader market movements, while there was also continued focus on the outcome of the US election.
At 10:52 am Singapore time (0252 GMT), the ICE January Brent futures contract was down 32 cents/b (0.42%) from the previous close at $75.21/b, while the NYMEX December light sweet crude contract fell 26 cents/b (0.36%) to $71.73/b.
Global markets continued to see participants remain on the sidelines as investors awaited the outcome of the tightly contested US election for more clarity.
Analysts said a Trump victory could provide short-term upside for the crude complex, as stricter sanctions could be enforced on Iran.
"However, in the medium to longer term, a Trump victory could be more bearish for oil due to trade and foreign policy," ING analysts Warren Patterson and Ewa Manthey said Nov. 6, adding "a Harris victory would likely keep the status quo."
The ICE US Dollar Index was at 104.360 at 10:37 am Singapore time (0224 GMT) Nov. 6, up 1% from the previous close.
A stronger dollar results in dollar-denominated assets like oil futures becoming more expensive to investors holding foreign currencies, dampening demand for these assets.
"Unless Trump pulls off a surprising Red Sweep, the runway for the US dollar rally might not be as long as some hope," SPI Asset Management’s Managing Partner Stephen Innes cautioned Nov. 6.
In economic news, the Federal Open Market Committee is set to meet over Nov. 6-7, where the Fed is expected to deliver another 25 basis point rate cut irrespective of the election outcome.
"While we still anticipate a modest 25 bps rate cut from the Fed at this week’s FOMC meeting, a Red Sweep would likely trim expectations of any significant rate cuts in the years ahead," Innes added.
In Asia, the headline au Jibun Bank Japan Services Business Activity Index fell to 49.7 in October from 53.1 in September, signaling a decline in service activity.
A reading above 50 marks an expansion, while levels below 50 reflect a contraction.
The contraction was the first since June but only fractional overall, as firms noted slower sales, with Usamah Bhatti, economist at S&P Global Market Intelligence, saying "businesses remained positive that this was just a blip in the road as expectations remained strongly positive."
US stock draws anticipated, Aramco cuts OSPs
The complex saw near-term support on the back of expectations of a 3.13 million barrel draw in US crude oil inventories in the week ended Nov. 1, data from the American Petroleum Institute showed Nov. 5.
This exceeded the expectations of analysts surveyed by S&P Global Commodity Insights Nov. 4, who believed inventories would likely hold steady at around 425.5 million barrels over the same period.
More definitive numbers are due for release by the US Energy Information Administration later Nov. 6.
Meanwhile, Saudi Aramco lowered all of its crude oil official selling prices to Asia and North America for December deliveries while raising all differentials to Northwest Europe and the Mediterranean, a pricing list showed Nov. 5.
For Aramco's flagship Arab Light crude in Asia, the differential against the average of GME Oman and Platts Dubai was decreased by 50 cents/b from November to plus $1.70/b, according to the price list.
Lighter grades saw similar decreases for Asia cargoes, with the December Arab Super Light and Extra Light differentials down 50 cents/b each to plus $2.45/b and $1.50/b, respectively. The differential for the heaviest Arab Heavy grade was lowered by 40 cents/b to a discount of 20 cents/b.
Dubai crude
Dubai crude swaps and intermonth spreads were lower from the previous close in mid-morning Asian trade Nov. 6.
The January Dubai swap was pegged at $73.44/b at 10 am Singapore time (0200 GMT), down 8 cents/b (0.11%) from the Asian close Nov. 5.
The December/January Dubai swap intermonth spread was pegged at 58 cents/b at 10 am, narrower by 2 cents/b over the same period, and the January/February intermonth spread was pegged at 31 cents/b, narrower by 1 cent/b.
The January Brent/Dubai EFS was pegged at $1.69/b, down 5 cents/b.
