On Wednesday, oil prices gained approximately 4% after President Donald Trump falsely claimed victory in a tight U.S. election. Although, millions of votes remained uncounted. In fact, data after this showed a massive decline in U.S. crude inventories.
Remarkably, winning by Donald Trump is seen as bullish for oil because of sanctions on Iran and his help for Saudi-led oil production cuts to support prices.
A contested result and continued uncertainty are seen as the most bearish outcome for oil and markets in general. Significantly, a victory of Joe Biden would be seen as bearish to neutral. Particularly, because he was supporting green policies and a softer stance on Iran.
West Texas Intermediate gained $1.59. It ended the session up 4%. Moreover, it settled at $39.15 a barrel. Meanwhile, Brent crude increased 3.8% (or $1.52) and touched $41.23 a barrel.
Remarkably, both benchmarks witnessed gains to session highs after data revealed U.S. crude inventories sank 8 million barrels last week because Hurricane Zeta caused production declines in the Gulf of Mexico through the period.
Moreover, U.S. weekly crude oil exports decreased by 1.2 million barrels per day to nearly 2.3 million BPD last week, which is the most significant decline since January. Furthermore, production fell 600,000 BPD to 10.5 million barrels per day.
OPEC+ agreed to reduce cuts by 2 million barrels per day
Moreover, Wall Street gained, and the U.S. dollar boosted versus a basket of currencies. As the too close to call presidential election left traders betting on a divided Senate that would keep stimulus flowing but hold tax increases and regulation in check.
Additionally, the hope that OPEC producers and Russia could consider deferring a planned rise in OPEC+ oil output from January as a second Covid-19 wave stifles a rebound in fuel demand kept prices afloat.
OPEC and collaborators led by Russia, a grouping known as OPEC+, earlier agreed to reduce cuts by 2 million barrels per day from the current 7.7 million barrel per day from January.
However, more lockdowns could cap oil price gains and decline demand. For example, Hungary, Italy, and Norway have tightened Covid-19 curbs, as well as France, Britain, and other countries.
Additionally, on Wednesday, Britain witnessed a massive gain in coronavirus infections. It recorded 492 new coronavirus deaths, which is the biggest number since May 13. Significantly, On Tuesday, total death recorded 397, and during one day, it boosted by almost 100.
