Oil trapped in narrow range as U.S. election anxiety fuels caution

Onome Amuge

Oil prices wavered on Tuesday, sandwiched between a tight range as the global market held its breath for the outcome of the U.S. presidential election. This was following a 2 percent surge in the previous session, as OPEC+ hit the brakes on plans to ramp up production in December.

The market’s jittery mood was largely attributed to the high-stakes election, which had the potential to jolt oil demand, policy, and geopolitical relationships.

Oil traded higher on Tuesday morning, with Brent crude futures inching up 16 cents, or 0.2 percent, to $75.24 a barrel, while U.S. West Texas Intermediate (WTI) crude futures crept up 18 cents, or 0.3%, to $71.65 a barrel.

The market, poised on the brink of uncertainty, was described as the “calm before the storm” by IG market analyst Tony Sycamore, who predicted turbulent times ahead in the oil market.

While oil prices had been bolstered earlier by the decision from OPEC+ to postpone a production increase by a month, as concerns about lagging demand and rising non-OPEC supply dampened markets, the looming U.S. presidential election was now the wild card that could send the market into a tailspin.

With a packed schedule of potentially market-shaking events, including the U.S. presidential election, the Federal Reserve’s policy meeting, and China’s National People’s Congress, traders took a step back, settling for a cautious approach on the sidelines as risk-taking took a backseat.

According to IG market strategist Yeap Jun Rong, while the U.S. presidential race looked like a photo finish, any delays in election results or squabbles over the outcome could cause short-term turbulence for the broader markets or leave them in a state of lingering uncertainty.

The spotlight was also on China’s National People’s Congress meeting, where investors were eagerly awaiting any hints of fiscal stimulus to boost the country’s demand outlook. 

However, in a game of wait-and-see, Rong, noted that China was unlikely to make any firm commitments before the U.S. presidential election results were final, leaving oil prices in a holding pattern until the election dust settled.