By Katya Golubkova and Emily Chow
TOKYO (Reuters) -Oil prices fell more than 1% on Wednesday as the dollar firmed on market bets the U.S. presidential election could swing in Republican Donald Trump’s favour though the race was still too close to call, and as stocks rose more than forecast.
futures was last down 90 cents, or 1.2%, to trade at $74.63 per barrel at 0450 GMT, while U.S. West Texas Intermediate (WTI) crude lost 82 cents, or 1.1%, to trade at $71.17 per barrel.
“The initial signs have been favourable for the Republicans and while it’s still early days, U.S. yields and the U.S. dollar are both trading higher,” said Tony Sycamore, an analyst at IG Markets.
“This in turn is weighing on the crude oil price which has had a good run in recent sessions.”
Trump was last leading in the U.S. presidential election on Tuesday, having won 211 Electoral College votes compared with 145 for Harris, with a third of the vote counted. The outcome of the race however remains uncertain with critical battleground states unlikely to be called for hours or even days.
U.S. stock futures and the dollar surged in Asia on Wednesday, as investors leaned toward a Trump win.
A stronger U.S. dollar makes greenback-denominated commodities such as oil more expensive for holders of other currencies, in turn curbing demand.
“If Trump wins, it is bullish for the oil market in the short-term due to prospects of tighter sanctions on Iranian oil,” said Soni Kumari, commodity strategist at ANZ Research.
In the longer-term, however, it could be bearish as Trump’s policies will be supportive for the U.S. oil and gas industry, while trade protectionism may result in weaker demand, she added.
Additionally, weakening demand signals also weighed on oil prices on Wednesday, said Phillip Nova senior market analyst Priyanka Sachdeva in a note, after data from the American Petroleum Institute data showed that U.S. crude inventories grew more than forecast.
U.S. crude oil stocks rose by 3.13 million barrels in the week ended Nov. 1, market sources said, citing American Petroleum Institute figures, higher than a 1.1 million barrels build-up projected in a Reuters poll.
Gasoline inventories fell by 928,000 barrels, largely in line with the poll, and distillate stocks fell by 852,000 barrels, according to the sources.