OIL FUTURES: Crude slightly lower following Trump win in US presidential election

Oil futures were slightly lower and trading in a tight range early Nov. 6 following news that former President Donald Trump was elected to a second term.

At 1156 GMT, NYMEX front-month crude was down 97 cents at $71.02/b, while ICE front-month Brent was down 95 cents at $74.58/b.

The Associated Press called the race early Nov. 6, after Trump was projected to take the swing state of Wisconsin.

Trump has promised to strip back regulations, encourage US energy production, and impose tariffs to push manufacturers to locate in the US.

"The anticipated impact on the US crude supply via Trump’s expressed interest in boosting US crude production -- the clearly bearish 'drill, drill, drill' motif -- is unlikely to weigh on global balances any time soon as US crude production is already at record levels and is driven by price rather than politics or access to federal lands," S&P Global Commodity Insights analysts said. "Lower oil prices are expected to slow US onshore growth in 2025, and lead to a decline in 2026."

Any concerns US producers had about a tougher regulatory environment under Harris will likely be assuaged by the Republican Party's "clean sweep" win, said Arne Lohmann Rasmussen, chief analyst at Global Risk Management.

The oil bulls can look to Trump's stance on Iran.

"Prior Trump-era sanctions were tougher on Iran’s ability to supply global oil markets," the analysts said. "Going forward, we also expect an increase in scrutiny of China’s imports of Iranian crude. Iranian crude exports fell to 1.3 million b/d in October from 1.7 million b/d a month ago."

Oil futures were already lower in overnight trade prior to the AP call on the election as Trump was already widely expected to win.

"Equities are in green, but buying oil was never part of the Trump trade -- oil price is a different animal," said Rasmussen.

Price pressure could also be a result of a perceived shrinking of the geopolitical risk premium, as market participants expect less Middle East disruption under a Trump presidency.

"For oil fundamentals, a Trump victory could provide some short-term upside with the risk of stricter sanction enforcement against Iran," said ING analysts Warren Patterson and Ewa Manthey in a note Nov. 6.

Some analysts pointed to a stronger dollar putting some downward pressure on oil prices.

“The strength of the US dollar counters the support the latest OPEC announcement [of delaying production hikes to January 2025] offered and weighed on oil prices,” Priyanka Sachdeva, senior market analyst at Phillip Nova, said.

US crude oil inventories increased 3.132 million barrels in the week to Nov. 1, data from the American Petroleum Institute showed Nov. 5.

“Fears of easing global demand continue to weigh on the crude oil complex as inventories rose higher than expected levels at 1.8 million barrels,” Sachdeva said.

Against the backdrop of a “Trump trade,” some analysts are pessimistic about crude oil's medium-term outlook.

“Oil prices have been on a falling trend for a while now. The weak global economy and sluggish Chinese demand, combined with the green transition, have taken a toll on global oil demand prospects, while OPEC’s production cuts have been countered by increased production elsewhere. The US, for example, is pumping like there is no tomorrow (and Trump vows to keep it that way),” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.