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Friday, March 24, 2023

Crude futures slip on Trump tweet call for cheaper oil, Brent down 1.2% at $66.31/b

London — Crude oil futures lost ground in midday trading Monday after US President Donald Trump reiterated his calls for lower global oil prices in a tweet, urging OPEC to “relax” its efforts to curb production to rebalance the global oil market.

At 1220 GMT, ICE April Brent was trading down 83 cents, 1.2% lower, at $66.31/b, while the NYMEX April light sweet WTI crude contract was down 39 cents, or 0.7%, at $56.38/b.

Before Trump tweeted at 1158 GMT, Brent was trading flat to higher at around a three-month high of $67.47/b, supported by signs that OPEC’s Saudi-led push to meet the group’s wider output cut targets are compensating for robust US shale oil growth.

“Oil prices getting too high. OPEC, please relax and take it easy,” Trump said on Twitter. “World cannot take a price hike – fragile!” Trump said in the tweet.

In November, Trump thanked Saudi Arabia for lower oil prices in a tweet when Brent was trading around $63.90/b, adding that he wanted prices to go lower.

Earlier Monday, optimism over the progress over ongoing China-US trade talks also lifted equity markets across Europe and Asia after Trump said on Sunday he would hold off an increase in US tariffs on Chinese goods planned for March 1 thanks to “productive” trade talks.

Goldman Sachs also said the near-term outlook for oil is “modestly bullish” over the next two to three months, following recent data suggesting that the oil market will likely continue to tighten significantly from March.

“Saudi Arabia has not only driven a ‘shock and awe’ OPEC strategy of cutting fast and deep to create a quick rebalancing before US shale producers can respond, but is also leading by example by guiding to March production 500,000 b/d lower than its own quota,” the bank said in a note.

Russian comments suggest OPEC’s key producer ally plans faster output cuts during March and April, while the unfolding crisis and sanctions on Venezuela are likely to further hit production from the country, the bank said.

The tighter short-term outlook comes as US production data shows that crude output has now reached 12 million b/d, almost 2 million b/d higher than a year ago, with US crude exports hitting a record high of 3.6 million b/d in the last reporting week.

“Crude oil continued to be carried higher on a combination of trade optimism and voluntary as well as involuntary supply cuts from OPEC and Russia,” Saxo Bank’s Ole Hansen said in a note.

“While the OPEC+ group of nations will continue to curb supply and support the market the risk is rising that the market has already priced in a positive outcome of the trade talks between the US and China.”

–Robert Perkins, [email protected]

–Edited by James Burgess, [email protected]

Source: S&P Global Platts

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