As news of Trump’s win broke, ICE Brent futures for January tumbled by $0.64/bbl from Tuesday to $45.40/bbl. Crude prices are likely to undergo a period of short-term volatility as a Trump presidency generally signals uncertainty for financial markets. This will be compounded by weak fundamentals in a market plagued by oversupply. The focus is expected to shift to OPEC’s November 30 meeting in Vienna where the group has to reach consensus before completing its September deal to cut output.
In the Longer Term
While Trump’s “America First” energy plan lacks specific details, it is largely focused on achieving energy independence and deregulating fossil fuels. Trump is likely to adopt policies that ease regulations on fracking as well as drilling in the Arctic and Gulf of Mexico. Such policies include lifting restrictions on fossil fuel production on all federal land. This is indicative of rising supply in the future, which may in fact keep crude prices depressed in the longer run. However, geopolitical factors such as Trump’s anti-Iran views may add further complications.