Oil slips with Biden on the brink of victory in US election

Oil snapped three days of gains, with Democratic nominee Joe Biden on the brink of a narrow victory in the US election.

Futures in New York lost 0.7%, but are still about 8% higher for the week. Biden needs six more Electoral College votes to claim the presidency, though with the Democrats less likely to win the Senate, traders bet there’ll be no major changes to taxes or regulations that have underpinned an equity bull market.

Crude has struggled to push beyond $40 a barrel as the coronavirus sweeps through economies again. On Thursday, Saudi Arabia cut most of its oil pricing for Asia, with the demand outlook cloudy. Meanwhile, road traffic in some European countries has fallen to the lowest since June, meaning OPEC+ faces a tough test as it tries to accelerate oil’s recovery at its November 30-December 1 meeting.

“Some profit-taking amid ongoing demand concerns are weighing a bit on prices,” said Giovanni Staunovo, a commodities analyst at UBS Group AG.

Prices
West Texas Intermediate for December delivery fell 0.7% to $38.87 a barrel at 7:56 a.m. in New York Brent for January settlement lost 0.4% to $41.07

If the current trends hold and there’s a divided US government, Biden may have to scale back proposals to remove subsidies for oil producers, said Helima Croft, chief commodities strategist at RBC Capital Markets. However, he should be able to advance plans to re-enter the 2015 Iran nuclear deal, which could bring back 1 million barrels a day by the second half of 2021, she said.

Although Biden is closing in on the 270 electoral votes he needs to win the presidency, incumbent Donald Trump has sought a recount in Wisconsin, filed lawsuits in Michigan, Pennsylvania and Georgia and complained about various states’ counting procedures. Recounts and legal challenges could lead to a prolonged period of uncertainty.