Oil prices drop with weak US demand, strong dollar amid election results

By Zeynep Beyza Kilic

Oil prices declined on Wednesday with strong US dollar amid early election results and data indicating weaker demand in the world's largest oil consuming country.

The international oil benchmark of Brent crude declined 1.6% to $74.25 per barrel at 10.21 a.m. local time (0721 GMT), down from the previous session's close of $75.46.

The US benchmark West Texas Intermediate also fell by 1.6% to $70.65 per barrel, compared to $71.80 at the prior session's close.

The American Petroleum Institute (API) reported late Tuesday that US commercial crude oil inventories increased by 3.13 million barrels, surpassing market expectations of a 1.80 million barrel rise.

The build in crude reserves reflected market perceptions of weakening domestic demand, supporting downward price movements.

Official figures from the Energy Information Administration (EIA) are scheduled for later in the day. If a rise in crude oil inventories is confirmed, prices are likely to fall further.

Market players are focused on the results of the US presidential elections. According to initial poll results, Republican candidate Donald Trump is leading the race against Democratic candidate Kamala Harris.

Experts believe that there will be changes in policies in the US economy depending on the election results, which will also affect commodity prices.

If Trump takes office for the second time, he is expected to impose new tariffs, especially on Chinese goods, reduce taxes and increase fossil fuel production.

The rise of the US dollar against other currencies aided the decline in oil prices. The US dollar index increased by 1.81% to 105.189. The strong dollar is expected to reduce demand by making oil more expensive for foreign currency users.

In addition, investors also await Thursday's monetary policy decisions from the US Federal Reserve (Fed) for further clues about the country's future economic trend.