On Monday, oil prices nosedived after US President-elect Donald Trump revealed his list of candidates for the next administration’s Energy Secretary.
West Texas Intermediate (WTI) December crude futures plummeted by 3.32% to $68.04 per barrel on November 11. However, commodity specialists anticipate a 1.22% recovery to $68.87 on the upcoming trading day.
Similarly, Brent oil futures for December delivery finished the week’s first session with a 2.76% retreat to $71.83 a barrel. Nonetheless, industry watchers predict a 1.33% recovery to $72.79 on Tuesday.
The Trump Trade narrative weighed on petroleum prices, exacerbating the negative influence of China’s economic downturn. Moreover, Beijing’s Friday announcement of a 10.00 trillion RMB ($1.40 trillion) debt package failed to impress market participants.
Investors expected the stimulus measure to be inflated following Trump’s victory in the 2024 US presidential elections. Swiss private bank UBP estimates that the Chinese government needs to inject at least 23.00 trillion RMB to meet the 5.00% GDP growth target.
In addition, the world’s largest oil importer published its October inflation report on Sunday, which heightened deflation concerns. The Chinese Consumer Price Index eased to 0.30% year-over-year (YoY), its slowest pace in four months.
Furthermore, China’s Producer Price Index fell by 2.90% YoY, a deeper contraction than the estimated slump of 2.50%. This reading extended the shrinkage that began in October 2022, pressuring oil demand.
Trump Projected to Choose an Oil Drilling Advocate
Throughout his campaign, Trump has been vocal about deregulating the oil industry, allowing producers to maximize their extraction capabilities. In response, economists cautioned that unrestrained drilling would cause stockpiles to balloon, crashing prices due to excess supply.
Betting polls peg North Dakota Governor Doug Burgum as the leading candidate to become the Energy Secretary of the incoming Trump administration. Burgum is known for opposing any attempts to limit activity or raise the cost of oil and gas leasing on federal land.
Energy experts said too much deregulation under the Trump administration could crash global oil prices. They added that though ramped-up production may lead to short-term gains, the long-term negative impact will likely be severe.
