Nasdaq leads stocks higher after Biden pulls back

Former President Donald Trump pledged to lower energy prices if he won the presidential election in November.

“By lowering the cost of energy, we will lower the cost of transportation, manufacturing, and all household goods,” Trump said last Thursday at the Republican National Convention.

“Dig, little one, dig,” he added.

The problem is that oil companies may not want to if prices fall too much, according to JPMorgan analysts. In fact, such a scenario could have the exact opposite effect than intended.

In a June 17 note that looked at the implications for commodities of the November “red wave,” Natasha Kaneva, head of global commodity strategy at JPMorgan, wrote, “We estimate the equilibrium price for WTI at around $70 per barrel, and believe that even at $60 per barrel, prices are too low to stimulate production, potentially pushing them to $100 per barrel next year.”

Matt Stefani, president of Cavanaugh Hill Investment Management, agrees that Trump’s pledge on energy prices may not come true:

“I don’t think a Trump win will have a significant impact on U.S. oil production or global oil prices,” he recently told Yahoo Finance.

However, expectations of a Trump 2.0 victory have weighed on oil stocks. Energy stocks have surged in recent weeks as investors have abandoned technology and Trump rises in the polls.

On Monday, West Texas Intermediate (CL=F) crude oil prices hovered around $80 per barrel. Brent crude (BZ=F), the international benchmark, traded just above $82 per barrel.