Crude oil prices are not expected to react to the results of the U.S. midterm elections Tuesday, although a Democratic victory could have implications for energy legislation, analysts said on Monday.
To take away Republican power in U.S. Congress in Tuesday's elections, Democrats must gain 15 seats in the House of Representatives and six Senate seats. Polls show Democrats are likely to take the House, but the contest for the Senate still is seen as too close to call.
"Obviously, the feeling is out there that if Democrats do well, its going to have an impact on the oil industry, but I don't see any immediate impact on price," said Tom Bentz, analyst at BNP Paribas.
Analysts pointed to a perception that a Democrat victory would mean some attempt to take away tax credits or incentives from oil companies, but any such action would need to pass both the House and the Senate and get President George W. Bush's signature.
"I'm not sure that anything Democrats want to do concerning energy will make their short list of things to do if they win," said Peter Beutel, analyst at Cameron Hanover.
He noted that the new Congress will not be seated until January and said Democrats may give energy legislation a lower priority than the Iraq war and issues such as raising the minimum wage.
U.S. Rep. Nancy Pelosi, who stands to be House speaker if her party takes control, has vowed to try to roll back billions of dollars in tax breaks and financial incentives given to big oil companies.
Pelosi also backs higher fuel efficiency requirements for cars and trucks.
But crude oil futures markets in recent weeks have been reacting to a perception of ample supply in the world's oil markets, and the efforts of OPEC producers to implement an output cut of 1.2 million barrel per day decided last month.
U.S. crude oil futures rose on Monday after Saudi Arabia's oil minister said OPEC will take more action in December if the current imbalance in the market remains.
Crude oil for December
One analyst said the oil market could feel a knock-on effect if the stock market reacts to the vote.
"It could have some impact if Democrats take both houses of Congress and it puts some downside pressure on the stock market," said Jim Ritterbusch, president at Ritterbusch and Associates in Galena, Illinois. "You could see that cause some long liquidation in the crude market."
