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What’s happening: Crude oil prices settled higher on Thursday, after recording losses on the previous day.
What happened: Oil prices remained volatile, with uncertainty around the impact of Donald Trump’s victory in the US Presidential race on the energy market.
Production in the Gulf of Mexico was paused due to Hurricane Rafael, supporting oil prices on Thursday.
Why it matters: Donald Trump secured a second term as the US President, defeating Kamala Harris in an electoral comeback. Investors remained uncertain about the impact of this win on the energy market, with Trump’s slogan of “Drill, baby, drill,” which was reiterated during his victory speech.
Strength in the US dollar, as Trump prepares to re-enter the White House, continued to exert pressure on crude oil, as a stronger greenback makes commodities more expensive for foreign currency holders.
Oil prices had declined sharply on Wednesday after a surge in the greenback. The US dollar index, which measures the greenback’s performance versus a basket of major peers, jumped to its strongest level since July on prospects of Trump’s fiscal policies resulting in increased inflation and giving the Federal Reserve little wiggle room to continue lowering interest rates.
The rise in the US dollar was curtailed on Thursday by the Fed announcing an interest rate cut of 25 basis points. The US dollar index edged lower during Thursday’s session, lending support to crude prices.
Data released by the EIA (Energy Information Administration) on Wednesday showed that crude oil inventories in the US had risen by 2.149 million barrels in the week ended November 1. The rise in gasoline stockpiles of 0.412 million barrels came against market estimates of a decline of 1.2 million barrels. Distillate stockpiles rose by 2.947 million barrels, versus expectations of a contraction of 1 million barrels.
WTI crude for December delivery gained 67 cents, or 0.9%, to close at $72.36 per barrel on the NYMEX (New York Mercantile Exchange) on Thursday, after recording a 0.4% decline in the previous session. January Brent crude added 71 cents, or around 1%, to settle at $75.63 per barrel on ICE Futures Europe.
In other energy trading, December gasoline rose 0.9% to $2.05 a gallon, while December heating oil added 0.7% to settle at $2.29 a gallon. Natural gas for December delivery fell 2% to $2.69 per million British thermal units, after gaining 2% on Wednesday.
What to watch: Investors will continue monitoring Trump’s speeches and social media posts related to the energy market.
Data on Baker Hughes crude oil rigs will be released today. Crude oil rigs in the US fell to 479 in the November 1 week, from 480 in the previous week, recording the lowest level in four weeks.
Context: Shares of Halliburton fell on Thursday, after the company reported downbeat results for the latest quarter.
Details: The Houston, Texas-based company recorded a decline in total sales amid lower North America sales.
Revenues fell 1.8% year-over-year to $5.697 billion, which missed consensus estimates of $5.828 billion. Adjusted earnings declined to 73 cents per share, from 79 cents per share in the year-ago period, and came in below Wall Street expectations of 75 cents per share.
The company’s North America revenues contracted by 8.5% year-over-year to $2.386 billion, amid hurricane-related disruptions in the Gulf of Mexico. Completion and Production revenues fell 5% year-over-year to $3.299 billion, while Drilling and Evaluation revenues rose 3.5% to $2.398 billion during the quarter.
The company’s operating income fell 16% to $871 million, while operating margins contracted by 258 basis points (bps) to 15.3%.
Halliburton’s results during the quarter were also impacted by a cybersecurity event in August.
“Our full year expectations for free cash flow and cash return to shareholders remain unchanged, and we expect both to accelerate in the fourth quarter,” CEO Jeff Miller said.
How shares responded: Halliburton’s shares fell 3.1% to close at $29.55 on Thursday, following the release of quarterly results. The stock has lost around 18% year to date.
What to watch: Investors will watch sales in North America, which are expected to significantly impact the company’s overall results ahead.
Other Markets: European indices closed mostly higher on Thursday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 1.70%, 0.76% and 0.62%, respectively, and the FTSE 100 down by 0.32%.
The Biden administration confirmed that the US would continue increasing aid to help Ukraine in its ongoing war with Russia before Donald Trump takes over as President. The news sent the safe-haven US dollar index slightly higher in forex trading this morning.
The Hong Kong Monetary Authority cut its base rate by 25bps to 5.0%, exerting pressure on the HKD/USD forex pair.
Japan’s foreign reserve assets fell to $1.24 trillion in October, from $1.25 trillion in the previous month, sending the JPY/USD pair lower in forex trading this morning.
Chile’s trade surplus widened to $1,450 million in October, from $703 million in the year-ago period. However, the latest reading came in below market expectations of $1,540 million, exerting pressure on the CLP/USD forex pair.
The Qatar Central Bank cut its lending rate by 30 basis points to 5.40%. Despite this, the QAR/USD pair rose slightly in forex trading this morning.
France’s balance of trade, foreign exchange reserves and current account, China’s current account, Italy’s industrial production and retail sales, India’s foreign exchange reserves, Brazil’s inflation rate, Russia’s foreign exchange reserves and total vehicle sales, Canada’s unemployment rate, employment change and average hourly earnings, US University of Michigan consumer sentiment, as well as Indonesia’s total car sales and motorbike sales.
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