By Jenny W. Hsu
Crude futures advanced in early Asia trade Monday on a technical rebound after falling to a six-week low overnight, as investors anxiously await the outcome of the U.S. presidential elections this week.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at $44.54 a barrel at 0214 GMT, up $0.47 in the Globex electronic session. January Brent crude on London's ICE Futures exchange rose $0.40 to $45.98 a barrel.
U.S. voters will on Tuesday decide between former Secretary of State Hillary Clinton and businessman Donald Trump as their next president. Some analysts believe Mrs. Clinton, who has shown support for clean energy, may remove billions of dollarsworth of subsidies for oil and gas companies, making it less lucrative for them to keep pumping. The move could eliminate some of the overhang that has kept oil prices suppressed for more than two years.
"Clinton victory on Tuesday could help risk assets such as oil rebound sharply," said Gordon Kwan, head of oil and gas research at Nomura.
Other market watchers have said a Trump presidency could see a increase in U.S. oil supplies as he favours the U.S. being more energy independent.
In a latest twist, the Federal Bureau of Investigation Sunday said a review of new evidence gave it no reason to reverse its earlier recommendation that Hillary Clinton not face charges related to her email practices while secretary of state.
"The fact that the FBI is not going after Clinton is firming up the direction of the race," said Grace Liu, the head of research at Guotai Junan International, adding that the latest development should support theglobal equity and commodities markets.
Societe Generale said in a note that global prices would not see any sharp swings no matter who clinches the victory on Tuesday, given the oil markets is still grappling with a surplus. The major event for most oil investors is whether producers both inside and outside of the Organization of the Petroleum Exporting Countries would be able to reach a production agreement later this month.
OPEC members made some progress towards the landmark production deal over the weekend by agreeing to use a unified set of independent production data for output cuts. The agreement removes a major sticking point among members who have argued their production levels were often misrepresented by the OPEC data which put them at an unfair baseline.
"Eventually, if a deal isn't agreed on 30 November, the potential that OPEC exports could gain further is a risk for the markets," said Barclays in a note, adding that individual country details still remain "challenging to agree upon."
Apart from the U.S. elections, oil investors will also be watching for the U.S. weekly crude inventory data on Wednesday and the U.S. oil-rig count on Friday. In the latest week ended November 4, the number of active oil rigs in the U.S. rose by nine to a total of 450, according to industry group Baker Hughes.
Nymex reformulated gasoline blendstock for December--the benchmark gasoline contract--rose 66 points to $1.3852 a gallon, while December diesel traded at $1.4403, 100 points higher.
ICE gasoil for November changed hands at $419.00 a metric ton, up $1.25 from Friday's settlement.
Benoit Faucon contributed to this article.
Write to Jenny W. Hsu at firstname.lastname@example.org
(END) Dow Jones Newswires
November 06, 2016 22:37 ET (03:37 GMT)
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