Oil Futures Surge as Equities Rally, US Crude Stocks Drop
WASHINGTON (DTN) -- Nearby delivery oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange surged in afternoon trade Wednesday, with December West Texas Intermediate futures settling above $39 barrel (bbl) with buying support underpinned by a large 8 million bbl draw from U.S. commercial crude oil inventories and rallying equity markets following Tuesday's presidential elections that have yet to be settled.
Former Vice President Joe Biden appears to have won the election, declared a winner in Wisconsin and Michigan on Wednesday even as votes are still being counted in Georgia and the key battleground state of Pennsylvania. However, President Donald Trump requested a recount in Wisconsin following the tight race and could seek additional legal challenges that could delay declaring a winner for weeks. The Bush-Gore election was decided by the U.S. Supreme Court five weeks after the election on Dec. 12, 2000.
A contested election was a high probability this year because of changes in voting by several states sparked by the COVID-19 pandemic. Investors on Wall Street shrugged off the delay, as the U.S. Senate appears likely to remain in Republican control, defying calls for a Blue Wave that could have ushered in sharply higher taxes and regulations. Major stock indexes moved sharply higher on the session on the likelihood of political gridlock for the next two years, with the Dow Jones Industrial Average surging 367 points to 27,847, and the S&P 500 Index rallying 74.28 points of 2.2% to 3,443.44.
Stock market gains came even as private payroll provider ADP reported a much lower-than-expected jobs figures for October at 365,000 new positions, down from 753,000 month prior. The Department of Labor will publish its nonfarm payroll report Friday morning, which is expected to show 600,000 new jobs were added in October, down from job growth of 661,000 in September.
On the session, NYMEX December WTI futures settled $1.49 higher at $39.15 bbl and the January Brent contract on ICE rallied $1.52 to $41.23 bbl. NYMEX December ULSD futures gained 3.12 cents to $1.1735 gallon and the December RBOB contract advanced 3.12 cents to $1.1081 gallon.
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