Oil prices dipped on Thursday, pulled down by rising U.S. crude inventories and as markets tried to interpret U.S. President-elect Donald Trump’s surprise victory.
U.S. crude stocks rose by 2.4 million barrels to 485 million barrels last week even though refineries hiked output and imports fell, the U.S. Energy Information Administration said on Wednesday.
But the inventory data was overshadowed by Trump’s election win, which initially stunned markets and led Ian Bremmer, president of U.S. risk consultancy Eurasia Group, to warn that “the world is heading into a profound geopolitical recession.”
Markets still shook off deep post-election losses and recovered.
“Investors have brushed aside the shock of the Trump victory in the U.S. election,” ANZ bank said.
BMI Research said Trump’s expected pro oil and gas industry policies might mean that U.S. “production of oil and gas could recover at a faster rate in 2017 as developers grow more encouraged.”
U.S. West Texas Intermediate (WTI) crude futures were down 14 cents from their last settlement at $45.13 a barrel at 0442 GMT.
International Brent crude oil futures were trading at $46.34 per barrel, down 2 cents from their last close.
Goldman Sachs said a Trump presidency would likely result in higher investment and, in time, increased U.S. oil output as the new president-elect has said he would de-regulate fossil fuel production.
Internationally, the bank said Trump’s threat of renewed U.S. sanctions against OPEC-member Iran would, in the short-term, lead to higher production as it “would further incentivize Iran to maximize production in the short term rather than comply to an OPEC freeze.”
This confirmed traders’ doubts over the ability of the Organization of the Petroleum Exporting Countries (OPEC) and other producers, especially Russia, to coordinate a planned output cut in order to prop up prices.
“The outcome of the U.S. election adds to the challenges for the oil exporters because it will likely lead to weaker economic growth in an already fragile global economy. And that means additional pressure on oil demand,” said Daniel Yergin, vice-chairman of the IHS Markit think tank.
In physical oil markets, the Niger Delta Avengers (NDA) militant group said it had attacked the Forcados crude export line operated by oil major Royal Dutch Shell.
Shell said that it had also shut down an Escravos crude oil flow station in Nigeria’s Niger Delta after villagers staged a protest demanding aid.
Source: Reuters
