A deeper look at oil prices after a US presidential election

Election day in the United States is tomorrow, and we’re taking a closer look at how oil prices change right after a new American president is chosen.

On Friday, we shared some patterns that emerged when we plotted a series of graphs showing the benchmark spot price of oil (dated Brent) for the 1992-2012 presidential elections. After seeing more details, we want to know what you think: How could oil prices move over the next 90 days or so?

This is part of a three-part series on The Barrel examining commodity price shifts around a US election, and on Tuesday we’ll look at more commodities, including gold and grains, with an analysis from Jodie Gunzberg, head of commodities and real assets at S&P Dow Jones Indices.

And remember you can find more coverage from this election cycle in our US Election 2016 news and analysis feature.

Bill Clinton and economic uncertainty?

In 1992, the US elected Bill Clinton for the first time. In the days following his election, the benchmark price of oil (Dated Brent, Platts) declined from $19.46/b on November 9 to a low of $16.56/b ― losing nearly 15% ― before climbing again after his inauguration. An argument could be made that Clinton 1.0 was untested economically, leading to market uncertainty initially. Prices rallied in late January after Saudi Arabia called on OPEC to cut production by more than 1 million b/d.

Bill Clinton 2.0: A rise, a drop and relative stability

On November 5, 1996, the US re-elected Bill Clinton to a second term. Contrary to 1992, the benchmark price of oil (Dated Brent, Platts) gained immediately the month after the election from $21.77/b to $25.11/b on December 5 ― firming 15.3% before dropping to $22.56/b, followed by some strengthening. Largely range-bound, the price averaged $23.37/b in the 90 days after Election Day.

George W. Bush: Clinton v.1 redux?

The first week after George W. Bush was elected on November 7, 2000, the benchmark price of oil (Dated Brent, Platts) gained nearly $3/b, but then plunged from $34.40/b to a low of $21.56/b by December 20 – a decline of 37.3%. Concerns of an economic recession pulled prices lower. Also, Iraqi crude exports, which had been suspended, looked to be returning as Iraq negotiated with the UN to resolve a pricing dispute under the oil-for-food program. Mirroring the first Clinton days, the price gradually strengthened, spiking after the inauguration. OPEC at the time was set to cut production by 1.5 million b/d starting February 1.

Second terms more stable for oil?

Bush’s re-election to a second term saw the benchmark price of oil (Dated Brent, Platts) immediately dip from the mid-$40s/b to high-$30s, followed by an upswing, a couple of falls and then further strengthening after January. Less volatility was evident than post-November 2000, and the price averaged $42.14/b in the 90 days after Bush was elected to another term. The return of US Gulf Coast crude following Hurricane Ivan pulled prices lower in November, while a December 10 OPEC decision to cut crude, followed by expectations of further cuts, rallied prices early in 2005.

Barack Obama: Hope and change doesn’t help oil

As with Bill Clinton’s and George W. Bush’s first terms, the benchmark price of oil (Dated Brent, Platts) eroded immediately after Barack Obama was elected on November 4, 2008 — but this was also skewed by the global economic collapse. The price plunged from $63.77/b to a low of $33.66/b on December 24 — a massive decline of 47.2%. The price strengthened sharply to $48.64/b by January 6, leveling off through early February.

Obama revisited: Steady uptick for oil

President Obama’s re-election on November 6, 2012, to a second term saw the benchmark price of oil (Dated Brent, Platts) grow quite steadily from $108.46/b the day after his re-election over the next 90 days to $117/b on February 5 — a modest gain of nearly 8%. Geopolitics played a role in the January rally, with Iran moving toward advanced uranium enrichment, for instance, and opposition growing in Iraq to Prime Minister Nouri al-Maliki.

 

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