Oil declines as traders zero in on US election, dollar surges

Brent for January settlement fell 0.9% to $74.84 a barrel at 11:24 a.m. in Singapore.

Oil slumped as traders monitored the US presidential election, and an industry report signaled a gain in stockpiles.

Brent crude fell below $75 a barrel, with West Texas Intermediate near $71. With polls closed in more than two-thirds of states, Donald Trump had taken an early electoral lead over Kamala Harris, although the contest could take days to settle. A gauge of the US dollar advanced, weighing on most commodities.

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The outcome of the race for the White House carries the potential for significant shifts in US foreign, energy and climates policy. If Trump were to win, curbs on Russian oil exports could be eased, while there might also be tighter sanctions on Iranian flows, according to RBC Capital Markets LLC.

Crude has been buffeted in recent weeks by shifting perceptions of risks to supplies in the Middle East, with Iran escalating its rhetoric against Israel. In addition, the OPEC+ alliance pushed back a plan to start restoring barrels to the market for a second time. Some traders have been hedging against $100-a-barrel oil if hostilities in the Middle East ratchet up after the US election.

“US foreign policy is shaping up to be a potential factor for oil markets in the near term” over Iran, said Vivek Dhar, an analyst at Commonwealth Bank of Australia. Also, “markets now must consider whether OPEC+ will perennially be forced to push their decision to reverse their voluntary oil production cuts.”

The industry-funded American Petroleum Institute said commercial crude inventories rose by 3.1 million barrels last week, with an increase also seen at the storage hub at Cushing, Oklahoma, according to people familiar with the figures. Official data are due later Wednesday.

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On the weather front, meanwhile, hurricane Rafael was threatening about 1.7 million barrels a day of output in the US Gulf of Mexico. Chevron Corp. has shut oil and gas facilities in the area.

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