The price of oil fell by more than 1%, which was caused by a significant strengthening of the US dollar after the news that Donald Trump is likely to become the new president.
Donald Trump led Kamala Harris by 267 electoral votes to 224, after Trump took the key battleground state of Georgia. 270 electoral votes are needed to win the presidency.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 1.40% to 104.87 (the highest value since October 11). The index was also set for its biggest one-day rise since March 2020. A stronger U.S. dollar makes greenback-denominated commodities such as oil more expensive for holders of other currencies, in turn curbing demand.
Meanwhile, the drop in oil prices was also driven by expectations that a Trump presidency could lead to policies that would negatively affect the Chinese economy and reduce oil demand. Recall that China is the world's largest importer of crude oil.
Also in focus was data from the American Petroleum Institute, which showed that U.S. crude oil inventories rose by 3.13 million barrels in the week ending November 1, while experts expected an increase of 1.1 million barrels. Gasoline inventories decreased by 928,000 barrels, while distillate inventories fell by 852,000 barrels. An official report from the Energy Information Administration will be released later today (at 15:30 GMT). Consensus estimates suggest that crude oil inventories increased by 1.8 million barrels after falling by 0.515 million barrels a week earlier.