Oil prices fall as Trump signals increased support for more drilling
President-elect Donald Trump's vocal support for more US drilling has contributed to volatile oil prices, with crude prices down 4.83% this week to $68.4 a barrel at the time of writing.
Brent crude oil prices fell 4.32% over the past week, trading at $72.2 a barrel on Tuesday morning. Both oil prices recovered a little later.
Trump's focus on more drilling has led to increased expectations for higher US oil production in the coming months, which in turn has led to lower oil prices.
China's recently released 10 trillion yuan (1.30 trillion euro) stimulus package has also been disappointing, with analysts worried it may not be enough to encourage economic growth. This in turn has increased concerns about the decline in oil demand from China in the near future.
OPEC+ has also warned that non-OPEC+ countries are likely to increase their oil production in 2025, which could also cause further oversupply.
According to OPEC+ forecasts, these countries are expected to increase production by 1.3 million barrels per day. The US Energy Information Administration (IEA) also expects non-OPEC+ countries to increase their oil production by 1.4 million barrels per day next year.
OPEC+ is also expected to release its monthly report for November later on Tuesday.
Trump has already made clear his strong support for oil and gas, promising to make it easier for companies to obtain drilling leases as well as build the necessary energy infrastructure.
Other policies include potentially allowing companies to export more natural gas abroad, as well as increasing drilling on federal land.
In contrast, the Biden administration has implemented higher bond requirements and royalty payments for drilling on federal land, while also reducing the number of federal land leases sold.
Trump has also said that energy bills will be cut by at least half within 12 months of his re-election, however, details of exactly how this would be done have not yet been revealed.
While these pledges have been welcomed by oil and energy companies, there have also been heightened warnings about oil profits and prices suffering in the short term, largely due to potential oversupply if drilling rules are eased.
Trump is also likely to reverse President Biden's ban on export approvals for liquefied natural gas (LNG), which is expected to significantly help reduce uncertainties about long-term LNG supply.
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