Oil prices reversed their downward trend on Thursday, November 4, following the Democrats' victory in the United States congressional elections. Brent crude rose by 4.0% to $98.38, while West Texas Intermediate (WTI) increased by 2.9% to $90.65 per barrel. This was the first price increase after four consecutive days of decline, which had brought prices to their lowest level in two months on Wednesday.
Impact of Elections on the Energy Market
Natural gas prices in the United States remained steady at $2.95 per million British thermal units (MMBtu), while gas prices in Europe rose by 1.9% to €89.72 per megawatt hour (MWh). The U.S. stock market also continued its downward trend on Thursday, with the S&P 500 index dropping by over 3% and the Nasdaq index falling by 5% in afternoon trading. This decline was due to widespread selling of stocks in the artificial intelligence sector.
Read more: The United Arab Emirates Increases Oil Exports
Developments in the Oil and Gas Market
The victory of Gina Hinojosa, the Democratic candidate in the Texas state elections, over Republican Governor Greg Abbott, raised concerns among investors. Hinojosa has called for a halt to new data center projects until necessary measures for protecting power and water resources are established. These concerns may negatively impact the growth of the artificial intelligence data center industry.
Analysts have warned investors that there is a possibility of slowing down new project developments due to political changes. Meanwhile, investment in the energy sector faced a 1.6% decline in the State Street Energy Select Sector SPDR ETF index to $62.50 on Thursday. The 8.7% drop in Brent crude prices on Wednesday reflected expectations for a peace agreement with Iran and the reopening of the Strait of Hormuz, which has now decreased by 10%.
Reports indicate that the physical oil market in the Middle East has reached a surplus for the first time since July. Oil exports from Gulf Arab producers rose by 10% to 15.53 million barrels per day in October. Saudi Arabia's exports increased by 13% to 7 million barrels per day. Exports from Iraq and Kuwait also rose to 3.35 million barrels and 1.44 million barrels per day, respectively. However, Iran's oil exports have dropped to zero for the second consecutive month.
Read more: U.S. Oil Transactions Reached $12.6 Billion in the Third Quarter · Increase in Demand for U.S. Crude Oil in Asia
