Oil Prices Drop As Markets Await U.S. Election Result

Oil edged lower as investors awaited the outcome of the tightly contested US presidential election, with Joe Biden on the brink of claiming a victory.

Futures in New York were trading below $39 a barrel after bouncing between gains and losses earlier. While predictions for a split Congress is fueling optimism that there will be no major changes to taxes or regulations that have underpinned an equity bull market, it also raises the likelihood of any post-election virus aid package likely being smaller than initially expected.

A demand recovery is much needed in the oil market, which is contending with a string of renewed lockdown measures across Europe that further threaten the demand outlook. Greece became the latest European country to declare a national lockdown, while England enters a four-week shutdown to curb the spread of coronavirus.

“Expectations for a Blue Wave where you would have gotten a $3 trillion stimulus, thats not going to happen,” said Bob Yawger, head of the futures division at Mizuho Securities. “That would have been a huge positive demand event for crude oil.”