NEW YORK: Oil prices rose over 2% on Tuesday, advancing with other financial markets on U.S. Election Day although traders were bracing for volatility depending on the voting results and as surging coronavirus cases around the world fed worries about fuel demand.
Brent futures rose 91 cents, or 2.3%, to $39.88 a barrel by 11:21 a.m. EST (1621 GMT), while, U.S. West Texas Intermediate (WTI) crude rose $1.04, or 2.8%, to $37.85.
Americans began casting ballots in an Election Day unlike any other, braving the threat of COVID-19 and the potential for violence and intimidation after one of the most polarizing presidential races in U.S. history.
“The oil complex is re-attaching to other risky assets … as election uncertainty kicks up volatility,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, noting “oil could easily disconnect back to the downside … once the election factor is cleared.”
Major U.S. stock market indices were all trading higher, with the S&P 500 up over 2.2%.
The U.S. dollar, meanwhile, dipped 0.8% against a basket of currencies as risk appetite grew on bets that Democrat Joe Biden will win Tuesday’s U.S. election and launch a large new stimulus package.
A weaker dollar makes oil cheaper for holders of other currencies, which traders said was helping to boost crude prices.
Analysts said those oil price gains were capped by rising coronavirus cases and the threat of additional lockdowns that could depress energy demand.
Italy and Norway became the latest European countries to tighten COVID-19 restrictions.
Benchmark oil prices, which dropped over 10% last week, got a reprieve this week after Russia’s oil minister held talks with domestic energy companies on a possible extension of oil output restrictions into the first quarter of 2021.
Algeria, which holds the presidency of the Organization of the Petroleum Exporting Countries (OPEC), said it supports a possible extension to current OPEC+ oil supply cuts for the first few months of 2021 to avoid another collapse in prices.
OPEC and allies led by Russia, together known as OPEC+, are due to taper cuts of 7.7 million barrels per day (bpd) by around 2 million bpd from January.
(Additional reporting by Ahmad Ghaddar in London, Sonali Paul in Melbourne and Koustav Samanta in Singapore; editing by David Gregorio, Louise Heavens and David Goodman)
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