Economy
Oil Plunges Below $100 as Rout Deepens, on Track for Biggest Weekly Drop Since 2020
Brent crude fell nearly 9% overnight to below $100 a barrel and is down about 20% this week, putting oil on course for its largest weekly drop since April 2020 as markets bet the US election outcome lowers the odds of a wider Middle East war.
Photo: Forextime.com / Wikimedia Commons (CC BY 2.0). Photo shows a stock market concept, not an oil facility.
Brent crude futures dived nearly 9% overnight, falling below $100 a barrel, and have dropped by about 20% so far this week. If the slide is sustained through to Friday's close, it would make for the largest weekly drop in oil prices since a week in April 2020, when US crude briefly fell into negative territory, Reuters reported.
At $93.50, Brent was testing its overnight lows in the Asia morning as traders bet that US President Donald Trump, facing a Democratic Congress and hurt by high energy prices caused by the Mideast conflict, would be less likely to escalate the war with Iran. "The magnitude of the victory is what has caught markets off guard," Chris Weston, head of research at brokerage Pepperstone in Melbourne, told Reuters.
Trump acknowledged on Wednesday that the war played a role in Republicans' defeat in the midterm elections, and his vice president, JD Vance, was blunter, saying the war was "the reason we lost." A resolution could push oil prices lower still, alleviating inflation pressure and reducing the likelihood of future interest rate hikes, Reuters reported.
Tumbling energy prices encouraged a rally in bonds, which lowered yields, pulled the dollar to a one-month low of $1.1273 per euro, and helped stocks. Broad stock indexes climbed on the clear election outcome, with the S&P 500 closing 1.6% higher and European shares notching a two-month high. The yield on benchmark 10-year US Treasuries fell to 4.87%, while 2-year yields eased to 4.56%.
Solar supply chain stocks jumped the most, in anticipation of Democrats boosting support for renewables, while shares in data centre companies and their equipment suppliers across Asia fell on expectations of tougher regulation. South Korea's chipmaker-heavy KOSPI slid 4% and was not far from a seven-month low in morning trade, Taiwan's benchmark index fell 1.8%, and tech equipment suppliers dragged Japan's Nikkei 0.5% lower.
Democratic data-centre opponents who campaigned, in part, on moratoriums on data centre construction won victories in Texas and Georgia. Most analysts think the shift ultimately will not dent demand for artificial intelligence, data centres or computer chips, but do now expect at least a temporary slowdown, Reuters reported.
Source: Reuters
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