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Oil prices fall over 2 percent as U.S. election looks tight

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by November 9, 2016 General

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices turned downhill on Wednesday as early counting showed Republican Donald Trump was doing better than expected in several crucial battleground states in the U.S. presidential election.

With traders glued to their screens, Brent crude futures unusually only started trading shortly before 0100 GMT, but as vote counting advanced, trading activity shot up and prices became highly volatile.

After seesawing early Brent prices turned downhill as the race between Trump and Democrat Hillary Clinton tightened, shedding over 2 percent in value from their last settlement, to $45 per barrel at 0250 GMT.

U.S. West Texas Intermediate (WTI) crude futures fell 2.8 percent to $43.70 per barrel.

“This is dejavu of the Brexit moment, very worrying,” said Bob Takai, president at Sumitomo Corp Global Research in Tokyo, referring to Britain’s surprise vote to leave the European Union in a referendum last June, which led to market turmoil.

The falls in oil came as prices for gold, a traditional safehaven for investors in times of uncertainty, jumped, while the dollar fell sharply against a basket of other leading currencies.

“Traders are sort of watching other vehicles like U.S. dollar futures and gold,” said Ric Spooner of CMC Markets in Sydney, Australia.

Trump held slight leads in the vital battleground states of Florida, Virginia and Ohio, clinging to a narrow advantage over Clinton in key states that could decide their race for the White House.

Elsewhere, a report by the American Petroleum Institute (API) showed crude inventory figures rising by 4.4 million barrel was also weighing on markets.

In Asia, physical oil analysts were digesting mixed data out of China on Tuesday, which showed a fall in crude imports and a rise in exports of refined products.

“Crude oil net imports fell to just 6.8 million barrels per day (bpd) in October, down from 8.1 million bpd the previous month. Although this is a very large drop, to the lowest monthly import level since January 2016, it is still up 8 percent year-on-year,” Barclays said.

Barclays said that the monthly decline was likely a result of falling strategic stockpiling.

“Some (independent) ‘teapot’ refineries are also thought to have used up their crude oil import quotas for the year, and that may also be having a negative effect on crude oil import demand at the margin,” the bank added.

(Reporting by Henning Gloystein; Additional reporting by Jane Chung in SEOUL and Aaron Sheldrick in TOKYO; Editing by Michael Perry and Richard Pullin)

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