Dollar Soars And Oil Dips On Historic Trump Win As Analysts Debate What's Next

The experts can't decide if Trump will turn the oil market bullish or bearish: File Image/Pixabay

Donald Trump's historic win as the 47th U.S. president sent the dollar soaring  to its highest level since September of 2022 – which in turn triggered modest losses for oil on Wednesday, since a stronger greenback makes dollar makes commodities such as oil more expensive for holders of other currencies.

Brent settled down 61 cents at $74.92 per barrel, while West Texas Intermediate settled down 30 cents to $71.69.

John Kilduff, founding partner at Again Capital, said of Wednesday's trading patterns, "There was an over-reaction to the election results, and that a Trump victory could have caused the U.S. industry to sort of drill itself into oblivion and cause a glut.

"But cooler heads have prevailed and this market has a lot of problems on its hands."

Kilduff was referring to war in the Middle East's potential to impact global supply; however, removing barrels from the market seemed to energize UBS analyst Giovanni Staunovo, who theorized that this could happen if Trump's reelection resulted in the renewal of sanctions on Iran and Venezuela, pushing the market into bullish territory.

By contrast, Citigroup Inc. stated that Trump's win would be net bearish due to for crude's prospects for higher U.S. supply, as well as fresh trade tariffs on China that may stymie growth.

For its part, Bloomberg noted that, "A Trump administration is expected to be more positive toward the nation's oil producers, while it may also rejig sanctions policy and enforcement, potentially seeking to curbs flows from major producer Iran."

The news agency went on to speculate that "Trump's victory is set to shake up U.S. energy and environmental policy, and there's likely to be sweeping implications for oil production, offshore wind development, and electric vehicle sales."

Goldman Sachs offered that "Conceptually, the impact of a potential second Trump term on oil prices is ambiguous, with some short-term downside risk to Iran oil supply ... and thus upside price risk; but medium-term downside risk to oil demand and thus oil prices from downside risk to global GDP from a potential escalation in trade tensions."

For the time being, the market remained firmly in bearish territory with news from the Energy Information Administration that U.S. crude inventories climbed by 2.1 million barrels to 427.7 million barrels in the week ending Nov. 1, compared with expectations for a 1.1-million barrel rise.