The Daily Dose; Oil too is fed up with the US race

-Saudi Aramco lowers its official selling price to Asia.

-Expect a weaker dollar under a Biden administration.

The counting continues in the US presidential race, with the Trump campaign filing lawsuit after lawsuit challenging some of the contests that could determine the next president. Equities were still in rally mode, though the mood darkened for commodities after a steady string of gains. Saudi Arabia may have set the tone for the commodities by announcing it was lowering its official selling price. Iraq, meanwhile, isn’t necessarily playing ball with OPEC curtailments, though that’s shouldn’t be too big of a surprise to anyone. Elsewhere, the US Federal Reserve held rates steady, but added more was needed to prop up the economy.

After a few days of bullish behavior, crude oil prices were in retreat for most of the trading session Thursday. US crude is looking for market support at around $39 per barrel. Brent crude oil, the global benchmark for the price of oil, was down about a half percent as of 2:15 p.m. ET to trade at $41.03 per barrel.

We still don’t know who won the presidential election in the United States. In the most general of terms, we would expect the candidate fretting over their chances of winning to express the loudest grievances. Nevertheless, we don’t know and perhaps won’t know for a few days at best. No matter what happens, there was no Blue Wave as expected before Election Day.

Investment bank ING notes the markets “appear” to believe former Vice President Joe Biden would win, but a Republican-led Senate would likely dampen any aggressive pivots. Big tax hikes are unlikely with a President Biden and a GOP-led Senate, trade wars would likely come to an end and the prospects of a stimulus increase. All that “points to a weaker USD outlook,” ING notes, which would be supportive of crude oil prices long term.

Let’s not forget, meanwhile, were in the midst of a global pandemic and there is no vaccine. Reuters oil oracle John Kemp wrote Thursday that the trajectory for oil prices depended at least in part on controlling the virus. From jet fuel consumption, to consumer demand for gasoline and freight, the demand destruction will continue so long as the novel coronavirus runs rampant across the globe.

Sensing the strain, state oil producer Saudi Aramco announced it was trimming 10 cents per barrel from its official selling price for Arab Light crude to Asia. Ibrahim al-Buainain, the chief of the company’s trading arm, said he believes Brent will be range-bound in the $38-$43 level, well below most Middle East producers, including Saudi Arabia, need to balance the books. The lower OSP suggests Saudi Arabia is going after volume, tacitly grabbing more revenue with more barrels. Iraq, meanwhile, continues to skirt its obligations to trim output to balance the market. For now, it looks like OPEC+ is going to keep things were there are, but we wonder if things will get desperate enough to jeopardize the collective, but shaky, friendship.

One-Time
Monthly
Yearly

Make a one-time donation

Make a monthly donation

Make a yearly donation

Choose an amount

$5.00
$15.00
$100.00
$5.00
$15.00
$100.00
$5.00
$15.00
$100.00

Or enter a custom amount

$

Your contribution is appreciated.

Your contribution is appreciated.

Your contribution is appreciated.

DonateDonate monthlyDonate yearly

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s