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Bush Win Sends Oil Near $51 a Barrel
Wed Nov 3, 2004 03:34 PM ET
NEW YORK (Reuters) – Oil prices surged more than $1 on Wednesday as the re-election of President Bush countered the impact of a big increase in spare oil supplies ahead of winter.

Crude dealers said Bush’s victory over Democrat Senator John Kerry could bolster U.S. fuel demand and underscore anxiety over the security of Middle East oil shipments. …

A second Bush administration will likely continue filling U.S. emergency oil stockpiles despite high prices and could stoke nerves about U.S. policy in the Middle East, particularly OPEC’s second-biggest producer Iran.

“A Bush victory will be big for oil demand and keep prices high,” said Phil Flynn, an analyst at Alaron Trading in Chicago. “Not only will the SPR be filled, but I think they may expand it.”

The Bush White House has said it plans to fill the final 30 million barrels of the 700 million barrel Strategic Petroleum Reserve (SPR) by next year, which adds to already strong demand from end-users.

Prices had tumbled from last week’s record high at $55.67, pressured by speculation that a win for Kerry would halt deliveries into the SPR, and do more to encourage energy conservation.

Dealers had also speculated that Kerry’s policy in the energy-rich Middle East would be less aggressive than Bush’s and more prone to move through diplomatic channels.

“If another Bush government moves on to Iran, then oil prices would go very high and really threaten China’s economic development,” said Andy Xie, Morgan Stanley’s chief Asia economist.