Crude oil prices are now steady in early Asian trading on Thursday, November 5, but not before plunging over 8% overnight to slip now only below the $100 a barrel mark, but also below $95.
Both Brent Crude and the US variant West Texas Intermediate (WTI) saw prices fall over 8% each overnight. Brent closed near the mark of $95, while WTI fell towards $88 a barrel. This was the worst single-day fall in crude oil prices since May.
Why Did Oil Prices Fall?
Crude oil prices extended their losses after the Democrats swept the midterm polls across the Senate and the House of Representatives, prompting experts to believe that the pressure on the GOP would now increase to end the war with Iran and make a deal.
Vice President JD Vance, in a long post after the election defeat wrote that the voter frustration over the war and the US-Israel relationship doomed the Republicans in the elections. Senate Minority Leader Chuck Schumer, a democrat, pledged to end the war soon as well.
Adding to this are remarks from Donald Trump to the Financial Times on Wednesday, when polls were still open, that there is no immediate plan to ramp-up attacks on Iran. Trump also went on to admit that it is “largely true” that it is the war that led the Republicans to a defeat.
Even as shipments through the Strait of Hormuz have increased despite the increasing attacks on commercial vessels in the region, the shipments of oil products remains constrained and that has led to gasoline and diesel prices hitting record highs in the US, triggering voter angst, which showed in the results. Escalating attacks by Ukraine and Russia on each others’ energy infrastructure had kept prices above $100 a barrel all through October.
Analysts at BOK Financial Securities believe that the democrat control of the Congress could also constrain US military spending and bring an end to the war sooner.
Government data showed overnight that the US stockpiles of distillates, a category which also includes diesel, fell below the 100 million barrel mark last week, the lowest level since 2003. Crude inventories also fell for the fifth week in a row.
