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Thursday, October 28, 2021

Oil up 1%, Recovering From Trump Tweet; Weekly Data Awaited

Oil up 1%, Recovering From Trump Tweet; Weekly Data Awaited© Reuters.

By Barani Krishnan

Investing.com – OPEC looks determined not be bullied by President Donald Trump and the market is buying that.

Crude prices were up nearly 1% on Tuesday ahead of a snapshot due at 4:30 PM ET (21:30 GMT) from industry group American Petroleum Institute on what the U.S. Energy Information Administration is likely to say in its Wednesday report about oil supply and demand for last week.

Both the API and EIA are expected to declare a sixth-straight weekly build in U.S. crude stockpiles for the week ended Feb. 22, not exactly great for bullish sentiment. But the market still rose on a Reuters report that OPEC and its allies planned to stick to their oil supply cuts despite Trump’s tweet on Monday that they should cool it after this year’s crude rally of more than 20%.

New York-traded crude was up 32 cents, or 0.6%, at $55.80 per barrel by 12:06 PM ET.

London-traded rose 59 cents, or 0.9%, to $65.50.

Both fell more than 3% on Monday, reacting to Trump’s tweet.

Trump’s unofficial White House campaign against pricey oil, waged via tweets, caused a 40% crash in crude prices in the fourth quarter as OPEC boosted supplies to appease the president, who also authorized unexpected waivers on sanctions of Iranian oil exports at the same to flood the market. Before the downturn, WTI reached nearly $77 a barrel and Brent moved above $86 from coordinated output cuts by the OPEC+ alliance led by Saudi Arabia and Russia.

Reuters quoted an OPEC source as saying on Tuesday it will not be swayed again by Trump.

“There is no doubt we will continue with our reduction as planned and we will push to reach the highest adherence to the cuts as we have decided before,” the source said.

Some cheered the OPEC stance and the market’s ability to come back within a day from the correction and urged buyers to build new positions.

“The tweet did not change the bullish outlook … use this market weakness to hedge,” Phil Flynn, analyst at The Price Futures Group in Chicago, who’s typically pro-oil, said in his daily note.

But Scott Shelton, energy futures broker at ICAP (LON:) in Durham, N.C. suggested caution for bulls going into the end of the first quarter and toward the start of the second.

“I think its going to remain messy here overall, with the market waiting for a signal on how the U.S. markets do as we move out of a turnaround as we are past the peak,” Shelton said, referring to crude supplies.

Seasonally, crude builds into the middle of March, he said, but “if we don’t net draw U.S. inventories, the market will be disappointed and may send us back to $50” on WTI.

“While I know that there are more data points than just the U.S., it’s the most visible and will need to be watched. We drew in Q1 last year and this needs to happen again to get the market over $60 as we approach Q2,” he added.

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Source: Investing.com

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