- Brent is back above $40 per barrel on 03 November 2020 prior to the U.S presidential election-day while WTI crude jumped by 3.53% to $38.13.
- The crude oil price was dropping in the past few weeks as fresh lockdowns were announced in major parts of Europe.
- The fresh rally in U.S financial market and a weaker U.S dollar has supported the recent crude oil price rally.
The Crude oil prices jumped early on 03 November 2020, with Brent benchmark crude prices back above the $40 per barrel, fresh rally in the financial markets and a weaker U.S. dollar on Election Day are considered the main reason for the recent jump in crude prices.
The U.S benchmark crude-WTI Crude raised by 3.53% to $38.13 and the Brent Crude was rallying 3.08% to $40.17as on 03 November 2020. While a day earlier, crude oil prices dropped in early trading after the news of more European countries announcing lockdowns. But the crude oil closed higher as the U.S. financial markets rebounded later on Monday.
However, many global analysts are not considering the recent rally as a sign of a recovery in crude oil price. The rally is a result of the speculation on the U.S election results, which is also reflected in the financial markets. The bearish factors are still lingering in the crude market as the second wave of Covid-19, igniting fears of fresh lockdowns.
In the view of slump in crude oil demand, Russia has proposed that OPEC+ must extend the production cut measure for another three months. Earlier the OPEC+ decided to cut the production through December 2020.
Libya, on the other hand, has increased the crude oil production recently, putting pressure on the prices. The country is believed to have increased the production by 100,000 barrels per day to 800,000 barrels per day.
The future of crude oil price is linked to the future President-Elect of the U.S.A. Joe Bidden in his election rallies and debate has pointed that he will resume the nuclear talks with the Islamic Republic of Iran. If the peace talks go positively in favour of both the countries, then Iran will be able to pump more oil into the market.
The democratic presidential nominee has also hinted to ease the trade-related tensions with China. The trade war has put curbs or restrictions on maritime trade between the two countries. The free and open trade may create a spike in demand for crude oil.
If the current President is reelected, the US-China trade-related tension may reach to all-time-high. The trade war could put a premium on currencies like the U.S dollar and Japanese Yen, but some of the currencies may see discounts like New Zealand and Australia dollars. They rely heavily on the economic performance of China.
The crude oil market is a highly volatile market, and price rise and fall depends on many factors including political, geopolitical issues and economic activity. The announcement of lockdowns in Germany, Italy, Austria and France might impact the economic activities and demand for the crude oil.
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