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Benchmark oil prices fell overnight following the news of Donald Trump's victory in the U.S. presidential race, but reversed some of those losses early Wednesday, in yet another sign of the turbulence the markets are undergoing as they digest the surprising presidential election outcome.
Analysts pointed to Trump's campaign-trail commitments to the fossil fuel industry — and his dismissal of the science of climate change — as reasons propelling the cautious optimism. "Mr. Trump has vowed to lead a fossil fuel revival to underpin job growth and has also put man-made climate change denial at the forefront of his energy policy," analysts from JBC Energy wrote in a research note Wednesday, USA Today reports.
In Japan, traders working a foreign exchange desk watch U.S. election results. The Nikkei index fell more than 900 points as Trump's win became real. Toru Hanai—ReutersThe Philippine Stock exchange fell to a 7-month low on Trump’s win. In this photo, a Filipino trader looks at the electronic board showing a downward trend during trading at the Philippine Stock Exchange at the financial district of Makati, south of Manila, Philippines, Wednesday, Nov. 9, 2016. Aaron Favila—APPedestrians look at an electronic stock board displaying the Nikkei Stock Average outside a securities firm in Tokyo on Nov. 9, 2016. The yen strengthened against the U.S. dollar, which will make it more difficult for Japan to fight off its ongoing inflation problem. Tomohiro Ohsumi—Bloomberg via Getty ImagesAs news that Clinton lost major battleground states was confirmed, billions were wiped from Australian Securities Exchange, as it was described as "a sea of red." David Gray—ReutersOne of Trump's biggest campaign promises has been to crack down on the Chinese government, who Trump says weakens the value of China's renminbi, giving it an unfair advantage in world trade. The Chinese currency rallied as the U.S. dollar's value fell following Trump's win. Wang Zhao—AFP/Getty ImagesAsian markets were up and running during the wee hours of the morning in the U.S., when Trump's gain on electoral college votes surpassed Clinton's. Hong Kong’s Hang Seng index fell to 2.6%. Isaac Lawrence—AFP/Getty ImagesGulf State markets -- such as the Qatar Stock Exchange being monitored by a trader shown here -- fell after news of the Trump victory. These markets are heavily exposed to changes in the oil market, and Trump has promised to make America an even bigger fuel and oil producer. Naseem—ReutersA trader watches Trump on TV as Dubai’s stock market falls. The one upside for traders there? The U.S. doesn't do much trade with countries like Dubai, so Trump's protectionist trade policies may not impact them directly. Ashraf Mohammad Mohammad Alam—ReutersIn Germany, the DAX exchange fell 3% after trading began, following news of Trump's victory. Michael Probst—APTraders on the floor at ETX Capital in London watched as Trump was elected. The UK markets suffered huge losses in June, after their own surprise Brexit referendum results sent stocks into a tailspin. Chris Ratcliffe—Bloomberg via Getty ImagesA man looks at a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai, India, November 9, 2016. Danish Siddiqui—Reuters
"Energy would benefit if some of the energy infrastructure projects that are stalled are released and move ahead," said John Conlon, chief equity strategist at People’s United Wealth Management.
There's also the possibility that the Organization of the Petroleum Exporting Countries, which has been trying to cobble together a coalition to cap output and shore up prices, could succeed in those efforts at its meeting this month, which would likely have an even bigger impact on prices than the U.S. election outcome.
Oil market analysts cited by the Wall Street Journal pointed out that oil might be getting a boost from investors shifting their money to commodities in a flight to safer havens. Others suggested that the volatility could be short-lived. “Some of the negative fears have waned," UBS analyst Giovanni Staunovo told Bloomberg.
"Donald Trump is a fan of all kinds of energy consumption… looking to traditional energy sources more so,” than solar or other renewables, said Mark Hamrick, senior economic analyst at Bankrate.com. “To the degree he puts policies in place that could lift coal and oil, we’ll have to wait to see what kind of impact that can have."
