Oil prices settled lower on Wednesday as a strengthening US dollar and Donald Trump's return to the White House influenced investor sentiment. Brent crude futures closed down 61 cents, or 0.81%, at US$74.92 a barrel, while West Texas Intermediate (WTI) crude dipped 30 cents, or 0.42%, to US$71.69.

Following Trump's victory, a wave of early selling pushed oil prices down over US$2 per barrel as the dollar surged to its highest level since September 2022. A stronger dollar typically pressures oil prices, as it makes dollar-denominated commodities more expensive for other currency holders.

"Initial excitement and sell-off reactions to the election results have eased, with traders now focusing on short-term supply-demand factors," commented Phil Flynn, senior analyst at Price Futures Group. He added that there could be upward movement ahead, as market concerns over a supply glut moderated.

Analysts noted that Trump's foreign policy might also impact the global oil supply. His potential renewal of sanctions on oil-producing countries like Iran and Venezuela could cut global output, providing a bullish factor for prices. Additionally, Trump's support for Israel may escalate Middle Eastern tensions, possibly disrupting supply chains.

Meanwhile, US crude oil, gasoline, and distillate inventories all rose more than anticipated last week, according to the Energy Information Administration. Crude stocks increased by 2.1 million barrels to 427.7 million barrels, exceeding analysts' expectations for a smaller rise.

Looking forward, market observers are closely watching for potential moves by OPEC+ and shifts in global demand, with higher supply and refinery margin pressures expected to remain influential.

Reuters