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US presidential election generally has a significant bearing on crude prices during an election year, given its impact on overall economy, energy policies and international relations. Historically, Democrats have opposed tax sops for the oil & gas industry and have been more in favour of renewable energy. Over the past 12 years, they have received only 23% of oil & gas funding and Republicans 77%. Our analysis of crude price action during the past five election years has thrown up some interesting facts. In particular, crude prices on an average jump 25% in first nine months of an election year, probably in anticipation of increased spending in the run up to elections in November. However, we have also observed that crude prices correct nearly 18% in H2 from their intra-year peak. Further, we note that crude has corrected in the year following elections in four out of five occasions, and in particular, when Democrats came to power. From the above two analysis it can be surmised that crude prices are due for a correction later in the year (H2CY12).
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