Oil prices fell about 1% on Thursday, after US President Donald Trump called on OPEC to increase crude oil output in order to lower prices. The prices managed to recover later on during the day, however.
US President Donald Trump tweeted “Very important that OPEC increase the flow of Oil. World Markets are fragile, price of Oil getting too high. Thank you!”.
Futures reached a session low immediately after Trump’s comments. Brent crude oil futures fell 1 cent, to $67.17 a barrel, after dropping earlier to $66.54 a barrel immediately following Trump’s tweet. US WTI futures fell 57 cents to $58.85 a barrel, after dropping to $58.20 earlier.
Brent crude is up about 25% this year, supported by OPEC and its allies such as Russia to cut output. The group, known as OPEC+, agreed to cut production by 1.2 million bpd earlier this year.
There is some doubt that Saudi Arabia and other oil producers will respond to President Trump’s call for increased production. Saudi Arabia is having trouble convincing Russia to stay longer in the deal because of uncertainty over the OPEC-led deal, sources familiar with the issue said. Moscow has only agreed to extend for three months.
US sanctions on Venezuela and Iran have imposed restrictions on the countries’ oil exports and high crude oil prices this year. Analysts said they expected the United States to extend some sanctions waivers on Iranian oil in early May, but this could reduce the number of countries receiving them.
The 180-day exemption was granted in November for China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea.
In addition to US sanctions, power cuts this month have paralyzed the Venezuelan oil industry even more. Sources said the main port of Jose and four other export ports had to convert heavy Venezuelan oil to grades that can be considered exportable, which weakened the progress for this week.
“If the unplanned supply cuts remain in place”, oil prices could reach the price of $75 a barrel as stocks fall, declare analysts, adding that demand concerns together with economic uncertainty linked to the US-China trade war have pushed up prices.
China has pledged to increase the opening of its huge financial markets to foreign investors as senior US officials arrived in Beijing for further trade talks.
The US Energy Information Administration reported that US crude inventories rose by 2.8 million barrels last week, compared with analysts’ expectations of a 1.2 million barrel drop.
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