(Photo : Oil price today)
Oil price today
- Oil prices dipped slightly due to receding threat of Hurricane Rafael and anticipation of Trump's policies.
- Brent crude oil futures decreased by 0.3%, while U.S. West Texas Intermediate crude saw a 0.5% increase.
- Prices were influenced by expectations of stricter sanctions on Iran and Venezuela, a strong dollar, and decreased crude imports in China.
- The oil market is navigating a complex landscape of natural disasters and political changes, closely watching for developments that could affect oil prices.
Oil prices experienced a slight dip on Friday, as the threat of Hurricane Rafael impacting U.S. oil and gas production began to recede. The market is also in a state of flux as it contemplates the potential impact of President-elect Donald Trump's policies on supply levels.
Brent crude oil futures saw a decrease of 26 cents, or 0.3%, settling at $75.37 per barrel by 0209 GMT. In contrast, U.S. West Texas Intermediate (WTI) crude saw an increase of 35 cents or 0.5% to $72.01.
These benchmarks experienced a drop after a near 1% rise on Thursday. Over the course of the week, Brent is projected to see a 3.1% gain, while WTI is expected to rise by 4.1%. Hurricane Rafael, which has resulted in the shutdown of 391,214 barrels per day of U.S. crude oil production, is anticipated to move slowly westward over the Gulf of Mexico.
This movement is expected to take it away from U.S. fields, and the hurricane is forecasted to weaken from Friday and throughout the weekend, according to the U.S. National Hurricane Center.
Impact of Trump's Policies and Dollar Strength
Friday saw a correction in prices after they had gained support on Thursday. This support was based on expectations that Trump's incoming administration may impose stricter sanctions on Iran and Venezuela, potentially limiting supply. However, these gains were capped by a strong dollar and a decrease in crude imports in China.
The strength of the dollar has a significant impact on oil prices. A strong dollar makes oil more expensive for holders of other currencies, which tends to put downward pressure on prices. This downward pressure was further exacerbated by data showing a 9% drop in crude imports in China in October. This marks the sixth consecutive month of year-on-year decline. Additionally, a rise in U.S. crude inventories also contributed to the downward pressure on prices.
On Thursday, oil prices had risen nearly 1% as the market considered the potential impact of Trump's policies on supplies. Drillers also reduced output in anticipation of Hurricane Rafael. Trump's first term saw the implementation of harsher sanctions on Iranian and Venezuelan oil. These measures were briefly reversed by the Biden administration but were later reinstated.
Global Market Reactions and Historical Precedents
Supporting prices was the U.S. Federal Reserve's decision to cut interest rates by a quarter of a percentage point at the close of its policy meeting on Thursday. Interest rate cuts typically stimulate economic activity and energy demand. However, the dollar index eased nearly 1% but remained near a two-week high after surging following Trump's victory.
In other related news, data from China showed that refiners processed around 15.11MMbbls/d of crude oil in October, down from 15.5MMbbls/d in the previous month, but up a little more than 9% YoY. The broader increase in refinery activity this year is not surprising given the recovery we have seen in domestic demand this year, along with refiners having received more export quotas.
The numbers suggest that apparent oil demand in October was 14.9MMbbls/d, down from 15.2MMbbls/d in the previous, but still up 11% YoY. Chinese crude oil inventories are estimated to have increased at a pace of a little less than 600Mbbls/d over October.
Historically, the oil market has been susceptible to geopolitical events and natural disasters. For instance, in 2005, Hurricane Katrina caused a significant disruption in U.S. oil and gas production, leading to a spike in oil prices.
Similarly, geopolitical tensions, such as the 2019 attacks on Saudi oil facilities, have also led to fluctuations in oil prices. As such, the current situation with Hurricane Rafael and the potential policy changes under the incoming Trump administration are in line with past events that have influenced the oil market.