Trump
Trend change, price update, analyst addition, context
London (awp/afp) – Oil prices slide downward on Thursday, with investors expecting a stronger supply of oil from the United States after the election of Donald Trump to the White House.
Around 11:30 GMT (12:30 CET), the price of a barrel of Brent from the North Sea, for delivery in January, lost 0.88%, to $74.26.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in December, fell 1.16% to $70.26.
“The Trump presidency may lead to higher production but also to new trade wars, hampering demand,” explain analysts at Energi Danmark.
Concerns persist over Donald Trump's potential pressure on China's economy from trade tariffs, which would dampen demand for oil from the world's largest importer. Beijing warned on Thursday that there would be “no winners in a trade war” with Washington.
Furthermore, the future American president also promised to bring down inflation and energy prices in the United States. The Republican is a strong supporter of fossil fuels and the market expects favorable conditions for American oil producers, which would lead to even more abundant supply from the United States.
However, these bearish effects remain contained because “investors expect a second Trump administration to stimulate American economic growth and consumption,” says John Plassard, analyst at Mirabaud, thanks to increased budgetary spending and tax cuts he announced during his campaign.
Another bullish factor, the president-elect's policy “could lead to tougher sanctions against Iran and Venezuela”, potentially reducing their production and exports of crude oil to the world market, notes Ole Hvalbye, analyst at SEB.
For its part, the EIA (American Energy Information Agency) reported a larger than expected increase in crude oil stocks in the United States last week (by 2.149 million barrels), which which tends to lower prices, although “American oil exports have fallen sharply, which makes the statistics for the week a little blurry”, specify DNB analysts.
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