Singapore: Oil pared gains and gold fell as early US election results shook traders' faith in a decisive outcome.
Oil in New York rose 1.2%, paring an earlier advance of as much as 3.4%. Spot gold fell 0.3%. The U.S. dollar dropped as polling stations in the eastern U.S. closed. Market uncertainty may lead to heightened volatility over the next few hours as traders react to headlines and early clues of a possible Donald Trump or Joe Biden victory.
A second wave of the virus in Europe and the U.S. and rapidly recovering Libyan crude production have weighed on oil prices over the last couple of weeks. However, increasing signs the OPEC+ alliance is likely to delay an easing of output cuts planned for January has spurred gains this week. Crude also got a boost on Tuesday after the American Petroleum Institute reported an 8-million-barrel drop in crude stockpiles last week.
Oil has been whipsawed this year as millions went into lockdown and factories shuttered, crimping consumption of fuels from gasoline to diesel. Concerns over a pile-up of crude at storage hubs prompted a sell-off that saw prices fall to minus $40 a barrel in April. After an output deal by OPEC+ subsequently tightened supplies, prices eventually settled at a levels around $40.
The stakes have never been higher in a presidential election as whoever wins will have the monumental task of leading the U.S. in its fight against a virus that's claimed more than 230,000 lives in the country and decimated the economy. On a global scale, the next president will also play an integral role in shaping domestic as well as international efforts against climate change, the use of fossil fuels and the pace of energy transition.
While a decisive win for Trump or Biden would offer certainty for the country, oil traders would have to weigh how their policies would tip the balance on prices.