OSLO — Oil prices rose as the market welcomes US stock draws and puts hope on OPEC+, amid excitement for the US election.

This Wednesday is a day when oil prices carry risk and can show volatility.

Prices have continued Tuesday’s rally and they are up on a strong relief sign from US crude inventories.

A projected draw of 8 million bpd is a surprise level, especially at a time when demand is increasingly under threat again due to COVID-19’s resurgence.

US storage levels and confidence that OPEC+ may after all postpone a planned output boost from January have brought enthusiasm in early trading Wednesday and have strengthened oil prices.

The price of OPEC basket of 13 crudes stood at $38.44 a barrel on Tuesday, compared with $35.89 the previous day, according to OPEC Secretariat calculations.

The OPEC Reference Basket of Crudes is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Djeno (Congo), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).

Rystad Energy’s Head of Oil Markets Bjornar Tonhaugen said: “The elephant in the room? The US election and its outcome. The market has boosted prices ahead of this significant election and its result could definitely weigh on the price direction.

“But as results stand at the moment, without an already clear winner, the election’s outcome is not yet really priced in this morning. Traders may look at oil storage data and think of OPEC’s future decisions to form prices, but for sure their one eye is locked on TV screens to get an update.”

“For the moment there is uncertainty on the election front, and it could very well last, so excitement and anticipation could keep prices up.

“But when the election is past us, we do not expect immediate legislation that will affect the market on day one, so traders will shift short-term focus to real fundamentals, demand and supply. And their balance looks threatened by COVID-19,” he added.

“However, the election result could have an impact on prices, and a Trump victory — in contrast to a Biden one — could help price levels keep gains more easily. A Biden win could also mean — at some point — a boost in demand and in turn prices, but also carries a supply risk which could flip the positive effect,” Tonhaugen said. — SG