What a great pick-up and report from CNBC’s, Tom DiChristopher and Marilyn Haigh. Earlier this morning we all saw the President’s tweet pertaining to OPEC. How quickly we received this report from the CNBC on the effect of his tweet:
- President Donald Trump blasted OPEC again in an early morning tweet that sent oil prices tumbling more than 1 percent.
- Trump has not tweeted about OPEC since early December, right before the producer group and 10 allied nations led by Russia defied his calls to keep pumping at high volumes.
- International Brent crude oil futures were at $66.26 a barrel at 7:51 a.m. ET, down 86 cents.
President Donald Trump blasted OPEC again in an early morning tweet that sent oil prices tumbling more than 1 percent.
“Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!” the president tweeted.
WTI crude oil futures fell more than 1 percent in sudden move following Trump’s tweet. International Brent crude oil futures were at $66.26 a barrel at 7:51 a.m. ET, down 86 cents.
Earlier Monday, oil futures rose on optimism over U.S.-China trade talks and tightened supply. On Friday, crude oil futures hit $67.73 a barrel, their highest levels in Nov. 16.
Monday’s tweet marks the return of Trump’s criticism of OPEC, a staple of his second year in office and his early political messaging before running for president.
Trump has not tweeted about OPEC since early December, right before the producer group and 10 allied nations led by Russia defied his calls to keep pumping at high volumes. The group instead agreed to cut 1.2 million barrels from the market.
The so-called OPEC+ alliance reached the deal after oil prices sank more than 40 percent in the final quarter of 2018. The group first began curbing output in 2017 to end a punishing downturn, but lifted the caps in June as oil prices hit 3-1/2-year highs ahead of Trump’s sanctions on Iran, OPEC’s third biggest producer at the time.
The producers, and Saudi Arabia in particular, hiked output through November, when Trump surprised them by allowing some of Iran’s biggest customers to continue importing its oil as sanctions snapped back into place. The move contributed to the sharp pullback in prices.
Top exporter Saudi Arabia has now sharply reversed course. After it’s output surged to a record 11.1 million bpd in November, it has throttled back production to 10.2 million bpd. Saudi Energy Minister Khalid al-Falih says the Saudis will cut even further, pumping at 9.8 million bpd next month.
In all his tweets at OPEC last year, Trump did not express a specific price preference, but in the past he has said oil should not sell for more than $40 a barrel and should ideally trade at $25. Those price levels would bankrupt many U.S. oil producers and make it difficult for even the healthiest drillers to turn a profit in the shale fields driving the boom in American output.
Saudi Arabia can produce oil at a lower cost than U.S. drillers, but the kingdom needs higher oil prices to balance its budget and pay for generous social programs that underpin stability in the nation.
- Tom DiChristopher and Marilyn Haigh