Monday, 7 November 2016

What happens to oil prices just after a US presidential election?

In Oil & Companies News 07/11/2016

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While many factors affect the price movements of commodities, S&P Global Platts considered an interesting historical exercise: To study the movement of oil pricing in the 90 days immediately following the most recent presidential elections in the United States, home of the world’s largest economy.
This is the first of a three-part series on The Barrel, examining commodity price shifts around a US election.
We plotted a series of graphs showing the benchmark spot price of oil (dated Brent) for the 1992-2012 presidential elections. The full series of graphs will appear Monday, November 7. For now, here are some highlights, and be sure to see more of our election coverage across various commodities in our US Election 2016 news and analysis feature.
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Some patterns are evident
• For newly elected presidents, the price of oil generally slides in the weeks just after Election Day, gaining then after their inauguration, or as the swearing into office draws near.
Clinton 1992
High price: $19.46/b on Nov 9
Low price : $16.56/b on Jan 20, 1993
Peak to trough decline of -14.9%
Rally of +12.5% to $18.64/b by Feb 1, 1993
Bush 2000
High price: $34.40/b on Nov 15
Low price: $21.56/b on Dec 20
Peak to trough decline of -37.3%
Rally of +37.7% to $29.69/b by Feb 2, 2001
It’s worth noting that in the Bush-Gore race of 2000, oil prices were somewhat of a campaign issue. Adjusted for inflation, they were at all-time lows in February 1999. Prices thereafter started to climb, leading to the long-term bull market before being interrupted by the fiscal crisis and ending with the shale boom. Perhaps most importantly, Bill Clinton—in an effort to help Al Gore’s chances—authorized the release of 30 million barrels in September-October from the Strategic Petroleum Reserve in response to low supply concerns in the northeastern US.
Obama 2008
High price: $63.77/b on Nov 4
Low price: $33.66/b on Dec 24
Peak to trough decline of -47.2%
Rally of +44.5% to $48.64/b by Jan 6, 2009
• After being re-elected to second terms (Clinton 1996; Bush 2004; Obama 2012) oil pricing generally shows less volatility after Election Day.
• The presidential election faring the strongest for oil prices in the 90 days after Election Day: Obama 2012.
• The presidential election faring the weakest for oil prices in the 90 days after Election Day (but also affected by the global economic crisis): Obama 2008.

Source: Platts