Oil Sinks 8% After U.S. Election; Stockpile Drop Ignored


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) - Crude futures tumbled 8% Wednesday (11/4) for its 
sharpest one-day loss in nearly seven months as large Democrat wins in U.S. 
midterm elections portended challenges to the Trump administration's war 
against Iran and other energy policies.

   The third straight day of losses in WTI and Brent futures came despite lower 
weekly crude stockpiles reported by the U.S. Energy Information Administration 
(EIA), which also noted lower balances for gasoline and distillates.

   NYMEX WTI crude for December delivery fell $7.97, or 8.29%, to settle at 
$88.12 bbl after a four-week low at $87.13. It was the U.S. crude benchmark's 
sharpest one day loss since April 17, when it settled at $83.85 bbl, down 
11.45% on the day.

   ICE Brent for January delivery dropped $8.98, or 8.67%, to $94.62 bbl. It 
was the global crude benchmark's lowest close since the August 31 settlement of 
$90.49.   

   Downstream, ultra-low sulfur diesel (ULSD) for December delivery eased 
$0.3251, or 7.18%, to $4.2055 gallon. It hit a 12-week low of $4.1710 earlier. 

   RBOB for December delivery retreated by $0.2069, or 7.05%, to $2.7286 
gallon. The intraday bottom of $2.7131 marked an eight-month low.

   The U.S. dollar index slid 0.276 points to 101.450 against a basket of 
foreign currencies. 

   The selloff across energy futures came as control of Congress flipped to 
Democrats in Tuesday's (11/3) midterm elections, with the party capturing at 
least 225 House seats to clear the 218-seat majority threshold while expanding 
its Senate majority to 54 seats.

   Come January, Democratic lawmakers plan to invoke the War Powers Resolution 
to constrain U.S. President Donald Trump, demanding formal congressional 
approval for any continued armed engagement in the Strait of Hormuz following 
recent airstrikes he ordered on Iran's Qeshm Island.

   Although the president maintains authority to launch short-term emergency 
military actions, Article I of the U.S. Constitution explicitly grants Congress 
the sole power to declare war.

   "Trump can maintain U.S. sanctions on Iranian oil via executive order, but a 
Democratic-controlled Congress can also push for diplomatic de-escalation to 
secure commercial vessel transit through the Strait of Hormuz," said John 
Kilduff, partner at New York energy hedge fund Again Capital.

   The Middle East diplomacy situation remains volatile as both Washington and 
Tehran weigh Qatari-brokered proposals to avoid an escalating regional war. 
Iranian officials, however, said significant ground remains to be covered 
before a deal, leaving open the threat of further attacks to 
energy-transporting vessels on the Strait of Hormuz.

   On the U.S. inventory front, commercial crude oil stocks dropped by 900,000 
bbl to 409.8 million bbl during the week ended October 30, extending the 
previous week's decline. 

   U.S. emergency crude stockpiles stored under the Strategic Petroleum Reserve 
also fell, by 399,000 bbl to the lowest levels since1982.

   Distillate fuel inventories fell by 3.6 million bbl to 99.3 million bbl, 
their lowest level since the week ended May 2, 2003.

   Gasoline inventories edged down by 200,000 bbl to 209 million bbl, reversing 
part of the previous week's 3.9 million bbl increase. 




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