(Bloomberg) -- Oil edged lower — but held most of its recent gains — as the market monitored a tight US presidential election and Hurricane Rafael menaced production in the Gulf of Mexico.
Brent crude traded above $75 a barrel after rising by 0.6% on Tuesday, with West Texas Intermediate below $72. Storm Rafael is threatening about 1.7 million barrels a day of output in the US gulf, and Chevron Corp. has shut some oil and gas facilities in the area.
Early results are beginning to be tallied in the US presidential election — with a gauge of the US dollar moving higher — although the final outcome in the race between Kamala Harris and Donald Trump could take days. Curbs on Russian oil exports could be eased if Trump wins, while there might be tighter sanctions on Iranian flows, according to analysts from RBC Capital Markets LLC including Helima Croft.
The global crude benchmark has rallied around 6% since the middle of last week — paring a sharp slump over the previous few weeks — as Iran escalated its rhetoric against Israel and the OPEC+ alliance pushed back a plan to start restoring barrels to the market for a second time. Some traders are 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.”
Elsewhere in the US, the industry-funded American Petroleum Institute said commercial crude inventories rose by 3.1 million barrels last week, with an advance also seen at the storage hub at Cushing, Oklahoma.
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