HOUSTON—Oil prices turned positive Wednesday after falling more than $2, despite U.S. crude inventories rising more than expected, the Energy Information Administration said.
Brent crude futures rose 38 cents, or 0.5%, to $75.91 a barrel at 11:07 a.m. EDT. U.S. West Texas Intermediate crude rose 57 cents, or 0.79%, to $72.56.
U.S. inventories of crude oil, gasoline and distillates rose last week, the EIA said Wednesday.
Crude inventories rose 2.1 million barrels to 427.7 million barrels in the week ending Nov. 1, the EIA said, compared with analysts’ expectations in a Reuters poll for a rise of 1.1 million barrels .
Donald Trump’s re-election as president had sparked a major sell-off during the session as the US dollar was on track for its biggest one-day gain since March 2020, sending prices down by more than $2 per barrel.
“There was an overreaction to the election results, and a Trump victory could have sent the American industry into oblivion and created a glut,” said John Kilduff, a partner at Again Capital in New York.
“But cooler heads have prevailed and this market has a lot of problems,” he added, citing the ongoing war in the Middle East as a supporting factor.
Investors believe a Trump presidency will strengthen the dollar as interest rates may need to remain high to combat inflation due to any new tariffs and policies that could put further pressure on the Chinese economy, weakening demand there.
Independent analyst Tina Teng said that in addition to a rising dollar weighing on commodity prices, a Trump presidency could see policies that put further pressure on China’s economy, squeezing oil demand from the world’s largest crude importer can weaken.
The dollar is set to see its biggest single-day gain against major peers since March 2020, when the so-called ‘Trump trades’ started.
A stronger U.S. dollar makes dollar-denominated commodities like oil more expensive for holders of other currencies, and tends to depress prices.
“A Trump presidency has a bearish tinge,” said UBS analyst Giovanni Staunovo. “Tariffs would be negative for economic growth and oil demand growth.”
However, Trump could extend sanctions on Iran and Venezuela and remove barrels from the market, which would be bullish, Staunovo added.
“He has little interest in renewables and will actively drive growth in U.S. oil production,” said Panmure Liberum analyst Ashley Kelty.
“This is not good for OPEC, which will have to decide whether to protect their market share or try to maintain price levels,” Kelty said.
Weakening demand signals also weighed on oil on Wednesday, Phillip Nova senior market analyst Priyanka Sachdeva said in a note, after data from the American Petroleum Institute showed US crude inventories grew more than expected.
Meanwhile, oil and gas producers in the U.S. Gulf of Mexico began halting production as Tropical Storm Rafael is expected to become a Category 1 hurricane early Wednesday.
This article was generated from an automated feed from a news agency without any changes to the text.
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