US President Donald Trump on Monday expressed concern about oil prices and repeated his previous calls on the Organization of the Petroleum Exporting Countries (OPEC) to keep prices steady.
On Monday, oil prices edged up amid political uncertainty and sanctions and involuntary curbs on several producers but could face pressure from continued anxiety over the global economy and record US exports, a Reuters report said.
Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!
— Donald J. Trump (@realDonaldTrump) February 25, 2019
OPEC members and non-OPEC producers such as Russia are leading efforts to re-balance the market and support oil prices.
Trump, who has made the US economy one of his top issues, has repeatedly tweeted about oil prices and OPEC, airing complaints about higher prices, including ahead of the organizations meeting in December.
Oil futures tumbled more than 3 percent on Monday in their largest daily percentage drop this year after Trump called on OPEC to ease its efforts to boost crude prices, which he said were “getting too high".
Brent crude futures fell $2.36, or 3.5 percent, to settle at $64.76 a barrel. US crude ended $1.78, or 3.1 percent, lower at $55.48.
The comment triggered a selloff that halted momentum from Friday’s session, when both benchmarks hit more than three-month highs on expectations for tightening supply and rising hopes for a US-China trade deal.
“I think that tweet set a lot of downward momentum early in the day, and we haven’t recovered,” said Michael O’Donnell, senior market strategist at RJO Futures in Chicago, a Reuters report said.
Crude prices have risen by about 20 percent since the start of the year when the Organization of the Petroleum Exporting Countries and non-member producers, such as Russia, cut production to reduce a global glut.
“Trump appears to be attempting to micromanage the oil... to maintain strong enough production to keep global supplies in surplus,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a client note.
“But as far as the Saudis are concerned, today’s tweets could even embolden their efforts toward restraint.”
Saudi Arabia recently estimated its production will fall in March by more than anticipated under the supply-reduction agreement, to 9.8 million barrels per day.
In addition, US sanctions on exports from Iran and Venezuela have tightened the market even as production in the United States surges.
“If you read into (Trump’s comments), I think there’s speculation there will, in fact, be another round of waivers granted to countries and companies to buy Iranian oil,” said John Kilduff, a partner at Again Capital Management, said about Trump’s tweet. “That’s also why you’re seeing the negative reaction.”
Washington surprised the market after granting waivers to eight Iranian oil buyers when the sanctions on oil imports started in November. Brent futures fell 22 percent that month and the waivers influenced OPEC’s December decision to cut supply starting in 2019.
Goldman Sachs analysts said “the near-term outlook for oil is modestly bullish over the next two to three months”, but added that the outlook for later in 2019 was weaker due to surging U.S. exports and an “an increasingly uncertain economic, policy and geopolitical backdrop”.
--With inputs from Reuters
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Updated Date: Feb 26, 2019 08:55:20 IST