On Wednesday morning, Donald Trump, “Tariff Man”, picked up right where he left off Tuesday evening.
In a series of morning tweets, Trump celebrated a Bloomberg scoop about China taking what sound like the first steps towards making good on their promise to “immediately” start buying more U.S. products. First up are LNG and soybeans, and perhaps the best part of Trump’s Wednesday tweet barrage was that the Bloomberg story sounds like it was news to him.
“Very strong signals being sent by China once they returned home from their long trip, including stops, from Argentina”, the President rambled, before hedging his enthusiasm with the following laughably colloquial take:
Not to sound naive or anything, but I believe President Xi meant every word of what he said at our long and hopefully historic meeting. ALL subjects discussed!
You’ve got to love that. “Not to sound naive or anything”. Too late!
Trump’s fresh take came after the President spent Tuesday tweet-bragging about the relative merits of tariffs and characterizing himself as a protectionist superhero.
A couple of hours later, Trump changed out of his “Tariff Man” uniform and put on his “commodities strategist” hat to push back on news that OPEC has come to a consensus on production cuts.
News out of Vienna (where OPEC and allied producers are huddled up ahead of tomorrow’s decision) is that the cartel and Russia have agreed to a production cut and the whisper number is 1m b/d.
Suffice to say the details remain unclear in terms of implementation and who will be responsible for shouldering the burden of the cuts, but what is crystal clear is that Trump is against whatever it is OPEC and Russia are planning on doing if those plans involve the word “cut”.
“Hopefully OPEC will be keeping oil flows as is, not restricted”, Trump tweeted, presumably in the middle of the funeral proceedings for President Bush. “The World does not want to see, or need, higher oil prices!”, he continued.
You’re reminded that Trump is a big part of OPEC and Russia’s decision calculus here, and the fact that he’s tweeting seemingly in real-time as the headlines come in from Vienna suggests the recent plunge in prices has not in any way, shape or form mitigated the extent to which he’ll be inclined to push back immediately in the event a cut is announced.
Oil rose on Wednesday as the cut began to take shape, but trimmed gains as the whisper number sounds like it will come in just barely inline with market consensus.
Crude volatility remains elevated following last month’s harrowing price action that found WTI logging its three worst single-day declines since 2015 all within the space of 10 sessions.
So, we’ll see what happens on Thursday. The bottom line is that OPEC and Russia need to figure out how to strike the right balance between allaying market fears around oversupply in an environment where global growth is slowing and not irritating Trump.
You can bet the Saudis haven’t forgotten the “big league” favor Trump just did for Prince Mohammed and it’s probably not a stretch to say that the White House is holding the CIA’s assessment of the Khashoggi killing over Riyadh’s head, effectively blackmailing the Kingdom into keeping a lid on crude prices.