Oil Drops as China Stimulus Underwhelms Amid Trump Uncertainty
(Bloomberg) -- Oil fell while remaining stuck in a narrow trading range for the week as investors struggled to assess how Donald Trump’s impending presidency will affect the market.
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West Texas Intermediate plummeted about 3% to near $70 a barrel after Chinese stimulus measures disappointed markets that were looking for bigger fiscal measures to support consumption. Iron ore and copper extended losses after the news.
Even with Friday’s loss, crude remains within a range of a little more than $3 for the week — the narrowest weekly trading band since July — and is seeing high volatility and low liquidity amid competing narratives of how Trump may sway oil supplies and demand. His decisive victory initially sent crude prices down as the dollar strengthened, though they later recovered on speculation that he’ll clamp down on Iranian supplies with sanctions.
Beyond the election, crude was swayed by OPEC+ delaying its planned output hikes by a month, a storm that shut some production in the Gulf of Mexico and a Federal Reserve interest rate cut. All told, oil is on pace for a narrow gain for the week.
Among the competing theories for how Trump will sway crude, Citigroup Inc. analysts said Trump’s presidency may be net bearish for prices on higher domestic production and tariffs that will weigh on the Chinese economy. Meanwhile, Standard Chartered Plc said US producers won’t necessarily heed his call for more drilling.
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