Trump's Victory Shakes Oil Market: Prices Dip as U.S. Production Expectations Rise

After Donald Trump's victory in the 2024 U.S. presidential election, crude oil prices have seen significant changes. Here are the main points:

Immediate Market Reaction:

1. Price Decline: On November 6, 2024, crude oil prices fell by about 2%. Brent crude futures dropped $1.17 to $74.36 per barrel, and West Texas Intermediate (WTI) crude lost $1.11, trading around $70.88 per barrel.
2. Strengthening Dollar: The drop in oil prices is linked to a rise in the U.S. dollar. A stronger dollar makes oil, priced in dollars, more expensive for buyers using other currencies, which decreases demand.

Expert Insights:

Analyst Perspectives: Analysts believe that Trump’s administration may lead to an increase in U.S. oil production because of his support for the oil industry, which could push global oil prices down. While there might be some short-term gains from sanctions on Iranian oil, the overall outlook could be negative. Additionally, Trump’s victory could lower geopolitical risks tied to oil prices, especially regarding the conflicts in Russia and Ukraine, which might lead to lower oil prices as market expectations shift.

Oil Supply Trends: With Trump as president, there are expectations that U.S. oil production will rise. This could lead to an oversupply of oil in the market unless OPEC+ reduces its production. Recently, OPEC+ chose to postpone any increases in their oil output until December 2024 in an effort to stabilize prices during fluctuating demand.

Conclusion: In short, Trump’s election has caused crude oil prices to go down because of a stronger dollar and concerns about future demand. Although there could be some short-term benefits from sanctions on Iranian oil, the long-term outlook might be negative due to higher U.S. oil production and a more stable political situation that lowers risks in the market.

Major resistance to watch :

R1- $72.75, R2-74.10, R3-75.60

Support- 

S1-$70, S2-$68, S3-$66