An Irritated Trump ‘Asked’ OPEC To Engineer Lower Oil Prices With 1 Million Barrel A Day Hike Because #MAGA, Ok?!

An Irritated Trump ‘Asked’ OPEC To Engineer Lower Oil Prices With 1 Million Barrel A Day Hike Because #MAGA, Ok?!

World renowned commodities strategist, McDonald’s connoisseur and man who knows better than anyone that it’s not paranoia if they’re really out to get you, Donald Trump, is concerned that higher oil prices are going to end up negating some of the benefits that are supposed to be accruing to American consumers from tax cuts.

Gas

That’s why, back on April 20, he blessed his 54 million followers with this bit of crude “covfefe”:

https://twitter.com/realDonaldTrump/status/987284041304100864

Yes, “very high!” And also “No good!” And also “will not be accepted!”

Absurd? Well, yeah – it’s Trump we’re talking about here.

But fast forward a month and the market would learn that as ridiculous as that tweet was, it actually did end up affecting OPEC’s decision calculus. Just as Wall Street was starting to speculate about a return to triple-digit crude, the Saudis appeared to relent to Trump and before anyone had a chance to take stock of what happened, oil was careening lower as it suddenly seemed likely that OPEC and Russia would boost output to ease the pain on consumers, placating Mr. #MAGA in the process.

Oil has fallen for two consecutive weeks as bullish inventory data out of the U.S. and the threat of escalating geopolitical tensions hasn’t been enough to trump speculation about Riyadh’s determination to stem the rally.

WTI

Additionally, the WTI-Brent spread hit its lowest since early 2015 last week:

WTOBrent

Well fast forward to Tuesday and Bloomberg reports that the U.S. did indeed request that the Saudis try and engineer lower prices. To wit, from a piece out this morning:

The U.S. government has quietly asked Saudi Arabia and some other OPEC producers to increase oil production by about 1 million barrels a day, according to people familiar with the matter.

The rare request came after U.S. retail gasoline prices surged to their highest in more than three years and President Donald Trump publicly complained about OPEC policy and rising oil prices on Twitter. It also follows Washington’s decision to reimpose sanctions on Iran’s crude exports that had previously displaced about 1 million barrels a day, or just over 1 percent of global production.

Needless to say, that’s got oil on the move with Brent falling below its 50-DMA for the first time since April:

Brent

Bloomberg goes on to note that “the American request was debated at a meeting of some Arab oil ministers over the weekend in Kuwait City.”

The White House declined to comment on the exact nature of the request (maybe it was written in crayon on construction paper in all caps with lots of exclamation points) but a spokesperson for the  U.S. National Security Council did say this:

We welcome any market-based action that increases energy access and fosters a healthy global economy.

Ok. For their part, Goldman is sticking with their thesis that the OPEC news actually isn’t bearish for crude. They were out with a note to that effect last weekend and head of commodities research Jeff Currie reiterated it at the S&P Global Platts Crude Oil summit in London Tuesday. 

“Between now and the end of this business cycle, I definitely want to be long oil”, he said, adding that “in the oil market, supplies from U.S. shale producers will likely be constrained through late 2019 [while] it will take 3 or 4 months for OPEC to add supply to global markets if that’s what it chooses to do.”

As Bloomberg dryly notes, the news that Trump asked OPEC to engineer lower prices “came as Currie was speaking.”

Remember, oil usually rallies around these types of moves:

HistoryOilGS

 

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