Oil Futures Slide as Obama Re-Elected
As Obama faces what promises to be a series of tough negotiations with Congress over a planned $600 billion in mandated tax gains and budget cuts, Greece, a nation half a world away, will be voting in parliament on a deal that would see bailout funds unlocked and made available for that country.
These circumstances combined to begin the 4.8 percent slide in oil futures, compounded by a government report that shows that American supplies of both crude oil and refined fuel shot up last week following the aftermath of Hurricane Sandy on the east coast. (Read more: Gray Market Forms as Fuel Shortages Continue in Northeast)
As the United States government shifts out of campaign mode, the newly re-elected president will need to contend with the Republican-dominated House of Representatives in order to determine the future of fuel and energy in that country, leaving an air of uncertainty over the market that will need to be cleared before oil prices and futures are able to stabilize.
“We need the two sides to come to a mutual deal that avoids this prospect, and I don’t know if I would bet on that occurring after the bitter campaign,” said Chip Hodge, a senior managing director at Manulife Asset Management who oversees a more than $9 billion natural resource bond portfolio. “The prospect of the fiscal cliff is a dark cloud over the market.” (Read more: Gas Prices Keep Falling, Survey Shows)
Those in the know where oil are concerned will be watching Obama’s moves closely over the coming months as the president attempts to avoid military action in Iran, even as he looks to right the fiscal ship at home. The continued cleanup of the devastating effects of Hurricane Sandy is also expected to continue to play a major role in fuel supply and prices, a process that could take months before production and consumption numbers return to normal levels.