Crude futures surge as US election uncertainty eases

0221 GMT: Crude oil prices surged during the mid-morning trade in Asia Nov. 9, shadowing the movement in other risk assets, as uncertainty subsided over the US presidential election result.

At 10.21 am Singapore time (0221 GMT), ICE Brent January crude futures were up 99 cents/b (2.51%) from the Nov. 6 settle to $40.44/b, while the NYMEX December light sweet crude contract was $1/b (2.69%) higher at $38.14/b.

The markers rose 3.98% and 3.77% in the week ended Nov. 6 as indications that the OPEC+ alliance could extend its current production cuts outweighed the uncertainty surrounding the the US elections. With Democrat Joe Biden declared winner of the 2020 race to the White House, oil resumed its uptrend.

"We are seeing sort of a sunshine effect caused by the provisional Biden victory, which is causing oil to rally this morning in line with the other risk assets and a weaker dollar," OANDA senior market analyst Jeffrey Halley told S&P Global Platts Nov. 9.

"The markets believe that the Biden administration will be more positive for international trade and could bring the US back into that framework, lifting global economic growth and providing a boost to global oil consumption," he added.

Strong economic data from China was adding to the uptrend, with customs data showing October exports were 11.4% higher on the year, Halley said.

AXI chief global market strategist Stephen Innes said in a Nov. 9 note: "Oil is trading a bit higher this morning in line with broader risk assets and a slightly weaker dollar as Joe Biden was declared the President, while on the data front, both the US jobs number and China's resilient exports number released over the weekend paint a better picture for the global growth outlook than expected."

However both analysts noted that market fundamentals remained bearish, with Innes adding that "what matters for oil is the pandemic and not the US election results."

With coronavirus infections in the US setting daily new records and the lockdowns in Europe likely to derail economic recovery, the outlook for oil demand remains bleak.

Against this gloomy backdrop, supply-side concerns were also heightened after Libya's National Oil Corp. reported Nov. 7 that Libya had doubled its oil output to 1 million b/d in the just over two weeks since its rival factions agreed to a peace deal on Oct. 23.

"Given the bearish fundamentals in the market, I am taking the rise in oil prices this morning with a pinch of salt. As far as I am concerned, oil remains a sell-on-rally asset for me," Halley said.