(Bloomberg) — Oil advanced above $38 a barrel and gold climbed for a third day as President-elect Joe Biden prepared to transition into the White House even as Donald Trump rejected the outcome of the U.S. election.
Crude futures in New York rose 2.9% and spot gold added 0.7% amid a broader rally in Asian stocks. The dollar extended declines. While Biden declared victory and prepared to navigate America’s pandemic-hit economy out of crisis, the unresolved status of Senate control may dampen prospects for major stimulus before January. Meanwhile, Trump’s campaign team mounted lawsuits in key states after alleging election fraud.
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Biden promised swift action against the pandemic and an orderly transfer of power during his victory speech over the weekend, but he inherits a divided country and an economy ravaged by the coronavirus as infections race toward 10 million. While a second Covid-19 wave across Europe is raising concerns about demand, trade data showed China is continuing to recover.
“The expectations of a more predictable and steady incoming Biden administration and the hopes of an additional stimulus package are pushing the prices of oil higher along with gold,” Will Sungchil Yun, a senior commodities analyst at VI Investment Corp., said by phone from Seoul. “Still, volatile prices should continue in the longer term with Trump potentially delaying the entire process and the resurgence of coronavirus happening in Europe.”
Investors are assessing the implications of Biden’s leadership on U.S. foreign policy and the stance toward China and key oil producers Iran and Venezuela. A potential U-turn from Trump’s combative “America First” approach could bring improved relations with allies. Biden has also pledged a range of first-day actions once inaugurated, including rejoining the Paris climate accord.
Asian renewable energy stocks rose as Biden’s victory increases the chances that the world’s largest economy accelerates its shift toward clean power. South Korean polysilicon manufacturer OCI Co. gained as much as 6.3%, while Chinese wind turbine maker Xinjiang Goldwind Science & Technology Co. added as much as 8.9%.
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Meanwhile, foreign oil purchases by China slumped to a six-month low last month due to lower seasonal demand, but overall imports in 2020 are expected to expand 10% from a year earlier as its economy continues to show strong signs of recovery. Asia remains a bulwark against faltering oil demand worldwide as the virus spreads unabated across the U.S. and Europe, spurring more stay-home measures.
In the physical crude market, traders were keeping close tabs on Libyan production after state-run National Oil Corp. reported Saturday that output now exceeds the million-barrel-a-day level — the most since December. Incremental production from the African nation comes as Brent’s 3-month timespread remains firmly in contango, where prompt prices are cheaper than later-dated ones, a market structure that signals oversupply
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