Oil Market Risk Running Especially High Now. Here's What To Watch
Ellen R. Wald, Ph.D | Nov 05, 2020 05:29AM ET
Here's a warning concerning the U.S. election and markets.
Right now, no one knows what will happen, and we may not know for weeks. Although Biden is edging closer to victory, the race is still undetermined, with each side accusing the other of shenanigans. The courts will most likely have a say in the outcome in more than one state.
In 2000, the presidential election was not settled until the middle of December and that scenario could happen again.
Markets despise uncertainty and disputed elections are even worse since they increase tension, especially in the U.S., which prides itself on an idea of smooth transitions of power.
If a dispute continues for days and weeks, the markets—even Mobility data from France last Friday, the first day of that country’s lockdown, showed that travel decreased by only 33% from pre-coronavirus life. In comparison, last March, during the initial lockdown, mobility decreased by 63%. Overall indicators of European economic mobility showed a decrease of 23.6% last week. These are early indicators that oil demand can be expected to drop in Europe, though not quite as much as it did in the spring.
There is much speculation that if Biden prevails in the election in the United States, he would support further lockdowns in American states if governors seek to impose them. Lockdowns, as we saw in the spring, have significant negative impacts on demand and instill ongoing fear, which also depresses oil demand.
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