Yesterday’s election results did, indeed, have an affect on the price of crude today, but not enough to send WTI down nearly 5% shortly before the market closes. Or enough to send Brent crude down nearly 4%.
But add in a build of nearly 1.8 million barrels of crude to U.S. inventories and a build of nearly 2.8 million barrels to gasoline stocks, and the reason for the price drop starts to come further into focus.
Then there’s the issue of supply. There’s just plenty of oil available, everywhere in the U.S. and enough to go around in the rest of the world as well. Distribution difficulties following Hurricane Sandy may be painful for those residents who can’t get fuel, but in the great scheme of the oil markets, it plays a minor role.
And after a downturn last night following the declaration of Obama’s victory, the U.S. dollar has gained nearly 0.4% on the euro, now trading at less than $1.28 to the single currency.
Finally, the re-election of President Obama has now focussed attention on the fiscal cliff and the likelihood that the president and the lame-duck Congress will just let the U.S. topple off the precipice. Crude traders clearly think that will happen, sending the U.S. back into recession and in general making another mess of the global economic recovery.
Every signal and every trader’s interpretation points to a weaker economy, and a weaker economy needs less oil.