The price of crude oil that had been steadily rising for the past three weeks lost its momentum once again on Tuesday and continued to stay that way on Wednesday, when the markets opened for business.
Analysts are divided when it comes to gauging the impact of the outcome of the US midterm elections on the price of crude oil.
Judging by the results so far, the final outcome is still too close to call; Democrats can, however, breathe a collective sigh of relief that it was not a spell of midterm blues that they feared over range of critical issues that bother electorate, ranging from energy crises to high inflation.
As of 10:30 GMT on Wednesday, the price of WTI, Brent and LNG, liquified natural gas, stood at $88.34, $94.86, and $6.14 respectively. The two major benchmarks of crude oil hit the highest on Monday after a lengthy period of price stagnation - before changing dramatically, a day later.
The prevailing sentiments in the markets got a boost during the latter part of the past week on the grounds of China's reported, less-rigid approach in tackling Covid-19 outbreaks. The ground realities, however, seem to be far from the highly, optimistic media reports, according to the latest data.
In fact, China seems to be taking the issue seriously and has not dropped its guard: there are reports of serious outbreaks of Covid-19 in the province of Guangzhou, a major, global manufacturing hub; having classified as the worst ever flare-up, the authorities are racing against the time to contain the outbreaks in order to avoid a major lockdown - a repeat of what happened in Shanghai.
In addition, China's imports and exports have significantly gone down as well, as confirmed by its latest data; the PMI manufacturing index has gone down considerably, from 50.1 in September to 49.2 in October, having risen steadily during the period between July and September.
The rise in Covid-19 infections and the contraction in imports and exports inevitably lead to the lack of demand for crude oil from the world's top crude importer and the markets reacted to the news accordingly.
That means, the price of crude oil is back at the mercy of fluctuating economic news that stems from the combination of spiraling inflation, job cuts in technological sector, rising interest rates, anxieties over the numerous energy crises, to name but a few.
In the US, the world's top crude oil producer - and consumer - meanwhile, the stakes are high for the Biden administration on the eve of the crucial midterm elections, in which the cost of living crisis has been a major focal point.
If the outcome does not live up to the expectation of the incumbent of the White House, ramifications will be felt far beyond Washington, D.C., that may arise from initial knee-jerk responses.
Analysts, for instance, will be monitoring the frosty relations between the US and Saudi Arabia, the de facto leader of the OPEC+: not only did the repeated appeals by the US authorities to increase the oil production fall on deaf ears, but also the Kingdom resorted to the polar opposite by embarking on a production cut, much to the dismay of the former.
Since the midterm elections did not result in the anticipated 'Red Wave', the Democrats appeared to have weathered the storm that mainly stemmed from rising energy costs and high inflation.
In this context, the OPEC+ may get away with the production cuts in the short run, as it may not be blamed on an election outcome that could have been disastrous for the Biden administration.
The possibility of repairing the ties between the US and Saudi Arabia, however, remains to be seen, despite the reports of the latter being on Iranian radar.
As far as the oil markets are concerned, there had been a significant crude build on the eve of the elections, something that analysts find difficult to associate with the elections.
The API, American Petroleum Institute, reported a crude build of 5.618 million barrels this week. The frequent, large crude builds, punctuated by relatively small draws, in recent months clearly show that the slowing economy and high inflation affect the way consumers use fuels in the world's top economy.
