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How To Trade Energy Ahead Of The U.S. Election

election

Normally I go out of my way to avoid the subject of politics when I write about markets because no matter what I say it will be interpreted as personal bias and probably alienate around half of my readers, or at the very least lead them to dismiss what I might say because it contradicts their own biases. Just in case you were lucky enough to be unaware of it though, there is an imminent election in the U.S. Given where we are in terms of the pandemic and the economy, it will be an important one for energy investors, indeed for all investors, so ignoring it and hoping it goes away just isn’t an option.

So, what does the most likely outcome of the election mean for oil and energy?

At the moment, it looks like the most likely result is a big win for the Democrat, Joe Biden. Yes, I know that the polls were “wrong” last time, but the situation now is quite different. Hillary Clinton’s poll lead was consistent but narrow, and in most cases within the margin of error. Biden has a double-digit average lead over Trump in national polls and is ahead by a significant margin in most of the swing states. Like it or not, history tells us that makes a Biden win extremely likely.

Traders and investors, no matter what their personal preferences, should always make decisions based on what is, not what they think should be, and when it comes to the future, on what is most likely, not what you might hope will happen. Right now, therefore, it makes sense…





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