The oil prices were flat on Tuesday, as traders awaited the results of the US Presidential Election later that day.
The oil prices rose sharply Monday, after the Organization of the Petroleum Exporting Countries (OPEC) and its allies extended the voluntary production cuts until the end of the month.
Oil prices have risen in the last few sessions but remain below the levels seen at the end of last year, when Israel and Hamas fought.
The price of West Texas Intermediate Crude Oil on the New York Mercantile Exchange at the time this article was written was $71.44 a barrel, essentially unchanged from its previous close.
Brent crude oil at the Intercontinental Exchange also remained flat, at $75.08 a barrel.
US Elections and Fed Meeting
On Tuesday, as the world waited for the results of the US election with bated breathe, the oil market was somewhat calm.
The oil prices have fluctuated over the past month due to increased geopolitical tensions across the Middle East.
The oil market may be waiting to see more clues from the closely contested race between the former president Donald Trump and vice president Kamala Harris.
Opinion polls indicate that Trump and Harris are in a tight race.
If Harris wins, the status quo will be maintained in terms of policies relating to the energy markets.
A Trump victory could also provide additional clues for oil prices.
Former US President George W. Bush could tighten sanctions against Iran and ease those against Russia.
Trump has also been vocal in his support of more oil and gas drilling.
The world’s biggest oil producer could increase production.
The US Federal Reserve policy meeting that will take place later this week is also likely to have an impact on the oil market.
Fed expected to reduce interest rates by 25 basis points
Lower interest rates are good for commodities, as they increase liquidity and lower borrowing costs in the economy.
China NPC meeting in focus
China’s National People’s Congress began a four-day session on Monday.
Market participants expect the government to continue to implement stimulus measures to stimulate the economy.
The financial markets were disappointed when China announced in October that it would increase its debt but did not provide any indications as to the size of the spending.
Recent reports claim that the country may approve an increase in debt of up to $1.4 trillion over the next few years.
China is the largest crude oil importer in the world, and also the second-largest oil consumer behind the US. Concerns over low demand from China weighed heavily on oil prices throughout 2024.
Oil prices could be supported by any concrete stimulus package from China.
Price forecasts
The oil price has risen dramatically since OPEC+ extended their production cuts on Sunday. Prices will likely remain stable for now.
The oil market is under pressure despite the production cuts.
In a recent report, Muhammad Umair, an author for Fxempire.com said that the record-high US production was one of the main factors behind this pressure.
Experts believe that Brent prices may rise even further to $80 per barrel, as they have already exceeded the 50-day exponential movement average of $75.
Christopher Lewis, an author at Fxempire said:
As far as I am concerned, short-term pullbacks may end up as buying opportunities.
Lewis believes the market will take further cues from election results and Fed meeting outcomes.
Lewis said, “I’d say that this is still more or less an opportunity to buy at a dip in the market. At least for the short-term.”
If WTI prices can break through the immediate resistance level of $72 per barrel, then the US benchmark may rise to $75 per barrel.
This article Oil prices stable as traders await more clues from US Election Results may be updated as new developments unfold.
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