World oil prices fell on Wednesday on profit-taking following President Barack Obama’s re-election victory and before the latest snapshot of US energy reserves.
Brent North Sea crude for delivery in December briefly breached $111 a barrel in the wake of Obama’s triumph. It later stood at $110.55 a barrel, down 55 cents from the close on Tuesday, when prices had rallied.
New York’s main contract, light sweet crude for December, dipped 29 cents to $88.42 a barrel.
Democrat Obama clinched his second election against Republican challenger Mitt Romney despite a slow economic recovery and the high unemployment that has haunted his first term.
Traders took the opportunity to engage in “some profit-taking after the highs yesterday,” said Victor Shum, analyst at Purvin and Gertz energy consultants.
The oil market faced a rollercoaster ride this week as dealers tracked the presidential election in the United States, which is the world’s biggest crude consuming nation.
Crude futures had tumbled to three-month lows on Monday as the market fretted over uncertainty over the crucial race between Obama and Romney.
The market swung higher on Tuesday, soaring by more than $3 in line with Wall Street gains and the weaker dollar, as Americans headed to the polls.
“European stock markets rose this morning on the back of Obama’s re-election, and oil prices also strengthened early in the day following the news,” said Gary Hornby, an energy analyst at British-based consultancy Inenco.
“Oil prices rose from a three-month low of $104.76 per barrel on Monday to over $111 earlier today on the election results, as Obama is expected to be firmer on oil drilling in the US, especially in regard to Alaska.”
Hornby added that the energy market focus would not switch towards the looming US fiscal cliff crisis.
“Focus will now shift away from the election results and onto the ‘fiscal cliff’, a series of tax hikes and spending cuts, due to be automatically introduced on the 1st January 2013.”
And he warned: “The initial euphoria of Obama’s re-election could be short-lived, with the global economy remaining fragile, the US economy in danger of tipping back into recession if the ‘fiscal cliff’ measures are introduced, and increasing tensions in the Middle East.”
Later on Wednesday, the US government’s Energy Information Administration (EIA) will publish its weekly report on American crude inventories for the week ending November 2.
“There are not major US economic data today, so the main focus will switch to the post-elections euphoria as well as the release of the weekly EIA oil inventories report,” noted Sucden Financial Research analyst Myrti Sokou.
Meanwhile in energy hungry China, Communist Party politicians were gearing up for a once-in-a-decade leadership change scheduled to take place at a Party congress, which starts on Thursday.