By Adam Claringbull
Investing.com – Oil was down on Thursday morning in Asia as U.S. presidential contender Joe Biden begins to look likely to win the U.S. presidency.
Brent oil futures fell 1.33% to $40.68 by 11:43 PM ET (3:43 AM GMT) and WTI Futures fell 1.33% to $38.63.
As the U.S. elections begin to draw to a close, it is looking increasingly likely that Democrat Joe Biden will be the next U.S. president. This is seen as a downside for oil, as the Democrats have a stronger focus on renewables and are likely to push an energy agenda more focused in that area.
However, the election result is not yet conclusive, and with many battleground states decided by razor-thin margins is likely to be a drawn-out process involving numerous legal challenges. The affect of the U.S. presidency on oil was demonstrated when President Donald Trump announced that he had won. Oil prices spiked 4% on the news, only to drop back once it was established that Trump’s declaration was somewhat premature.
“Perhaps the biggest conclusion to be drawn at this stage is that there is only a small likelihood that existing oil & gas tax incentives will be removed in the U.S. – even if Biden emerges as the winner – given the narrow margin of victory and a probable Republic majority in the U.S. Senate,” Artem Abramov, head of shale Research at Rystad Energy, told Reuters.
Less uncertain is the continuing rise in global COVID-19 cases, with Johns Hopkins University data showing 600,000 new daily cases globally, with a total of over 48 million cases registered. The ongoing growth of the coronavirus pandemic is pulling back demand forecasts for the foreseeable future, with a corresponding negative impact on oil prices.
One bright spot is the latest crude oil inventories data from the U.S. Energy Information Administration (EIA), which showed a surprisingly large drawdown in U.S. crude reserves of 7.998 million barrels, as against a forecast draw of 890,000 barrels.
This follows crude oil stocks data from the American Petroleum Institute that also presented a large unexpected draw of 8.01 million barrels against a forecast fall of 600,000 barrels.