The upcoming 2024 U.S. presidential election guarantees a new leader, and the financial markets are preparing for potential shifts. Crude oil, a critical commodity, is expected to react as the political landscape changes. Using machine learning to analyze U.S. economic data, we can forecast crude oil's movement in the short, medium, and long terms.
Key Machine Learning Predictions for Crude Oil Prices
The machine learning model offers predictions on how crude oil prices could respond to the election.
- Short-Term Impact: Minimal volatility is expected in the first month, with price fluctuations likely staying below 2%.
- Medium-Term Impact: A sharp increase of over 40% is possible within one year, driven by economic recovery and fiscal policy adjustments.
- Long-Term Outlook: Over four years, crude oil could see more moderate growth, averaging around 15%. Economic factors like interest rates and industrial activity are expected to play a more substantial role than the political party in power.
Economic Drivers of Crude Oil Prices
According to the machine learning model, the most influential factors driving oil prices are U.S. economic indicators, such as the Fed Funds Rate and labor market conditions. Unlike the common belief that political outcomes dictate price changes, the model shows that crude oil prices are influenced more by fundamental economic data than which party wins the election.
Historical Crude Oil Reactions to U.S. Elections
A historical analysis of past U.S. elections reveals that crude oil prices often respond to economic and global conditions rather than the political party in office. For instance, crude oil surged by 33.8% following Barack Obama's 2008 election, driven by the global financial crisis recovery. Meanwhile, oil prices jumped 100% after Joe Biden's victory in 2020 due to post-pandemic economic recovery and supply chain disruptions.
Crude Oil Futures Contracts: CL and MCL
When trading crude oil, two of the most popular contracts are WTI Crude Oil Futures (CL) and Micro WTI Crude Oil Futures (MCL). The CL contract represents 1,000 barrels of oil, while the MCL contract represents 100 barrels, offering smaller traders a more manageable risk exposure.
Risk Management for Oil Traders
With heightened volatility expected, traders must utilize risk management strategies such as stop-loss orders, proper leverage control, and position sizing. Tools like AutoUFOs®, which helps identify UnFilled Orders (UFOs) on a chart, and AutoClimate™, which indicates market trends, can assist traders in refining their strategies.
Incorporating tools like AutoUFOs® to spot precise entry and exit points, or AutoClimate™ to assess market trends, can improve trading accuracy, especially during periods of increased market volatility. Our trading courses provide powerful strategies to navigate these turbulent times.
Want to read an expanded article with multiple TradingView charts that illustrate the application ? Check it out here: tradingview.com/u/traddictiv
- Follow us and Boost the TradingView Published Idea if you like it 👌
Want to know more about AutoUFOs® and AutoClimate™ ? Check it out here: tradewithufos.com/apps
TRADDICTIV · Research Team
