New Delhi (IANS) Hit hard by the Covid-19 pandemic, the global crude oil market has been largely subdued this year.
The upcoming US presidential election, which always has a significant impact on markets across the board, will also play a crucial role in oil price movement, given the divergent view of both the candidates on oil and energy.
According to a report by Motilal Oswal Invesment Services, President Donald Trump’s re-election would bring stability in prices, while Democrat candidate Joe Biden’s victory is likely to bring uncertainty and volatility.
“Crude oil investors are facing a confused stance as President Trump’s presidency brings stability and the Presidency under Biden might bring uncertainty and more volatility in the market,” it said.
The report noted that if Trump is re-elected, prices may remain in levels of $45 as he would like to keep prices in this level to make sure gasoline prices remain in control, which remains a main concern of the US taxpayers.
As per the report, if US voters decide to stay the course, the current push for energy dominance through increased drilling will continue. He is seen as a promoter of ‘Shale’ which might put pressure as any stimulus and benefit to the shale sector would lead to overproduction and more responsibility on OPEC+ to cut production and bring balance in the market.
On the other hand, compared to a second term of the Trump administration, according to the Motilal Oswal report, a Biden Presidency could be a positive for the US oil and gas drillers because tougher regulations on hydraulic fracturing would likely reduce production, raising crude prices to levels of WTI $45-$55 in the coming months after the elections.
Biden has pledged to end new drilling on public lands and move toward a carbon-free future. With his $2 trillion plan to cut greenhouse gas emissions, Biden might seem a far from ideal President for the Texas oil and gas industry, it noted.
“Looks like for crude oil to rally, markets are praying for Vice President Biden to win and bring back optimism in the market as demand recovery is stalling and it might take more months for crude demand to recover,” it said.
Biden’s win is likely to be an upward catalyst for oil prices because it will increase costs for shale patch and will likely result in a weaker US dollar.
Over the past several months amid the pandemic, crude oil prices have been largely subdued due to supply glut along with poor demand.
Currently, the November futures contract of WTI crude on the NYMEX is trading at $40.78 per barrel, lower by 0.44 per cent. The December contract of Brent crude on the Intercontinental Exchange was $42.91 per barrel, lower by 0.58 per cent from its previous close.