Global Oil Prices Plummet for Fourth Consecutive Day Amid Easing Tensions

Fears of Escalation Subside

Global energy markets are rapidly adjusting to the new political reality in Washington. Oil prices fell sharply today for the fourth consecutive day of trading. Brent crude futures dropped 97 cents to settle at $93.65 a barrel. U.S. West Texas Intermediate crude futures also dropped $1.14 to hit $86.98. The market is heavily reacting to the massive losses suffered by the Republican Party in the recent US congressional elections.

A Growing Market Surplus

Both major oil indices fell by more than eight percent in the previous session, settling at their absolute lowest levels since August 31. Traders believe the Democratic victory severely reduces the likelihood of any sudden military escalation in the Middle East. Furthermore, JPMorgan estimates show the global oil market currently faces a massive supply surplus. The surplus widened to 1.4 million barrels per day in October.

US Inventories Drop

Interestingly, the U.S. Energy Information Administration announced a surprising drop in domestic stockpiles on Wednesday. Crude oil, gasoline, and distillate inventories in the United States all fell last week. This indicates that American domestic energy demand just hit its absolute highest level in a year. However, the sheer volume of global oversupply continues to drive international prices downward.

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