Crude Market Shrugs off Latest Tweet From Trump - Who May Get His Wish For Lower Prices Anyway

Thursday March 28, 2019

Another day, another tweet from U.S. president Donald Trump, who on Thursday reiterated his famous position that crude prices are too high and output must be increased by the Organization of the Petroleum Exporting Countries (OPEC) -  and although this caused prices to plummet early in the trading session, they rebounded quickly and ended flat.

West Texas Intermediate settled 11 cents lower at $59.30 per barrel, while Brent fell a paltry 1 cent to $67.82 per barrel on Thursday, after Trump tweeted, "Very important that OPEC increase the flow of Oil: world Markets are fragile, price of Oil getting too high - thank you!"

John Kilduff, founding partner at Again Capital, observed, "There is some skepticism that Saudi Arabia and other oil producers will heed president Trump's call for more output, which was the initial reaction."

Yet despite the mainstream press's amusement over Trump and his tweets, the brash billionaire may ultimately get his wish: three sources familiar with the matter told CNBC that the Saudis are having a hard time convincing Russia to stay much longer in OPEC's cutback deal, and Moscow may only concede to a three-month extension before resuming its long-held plans to pump full-out.

Tom Kloza, global head of energy analysis at Oil Price Information Service, noted that even though Trump is concerned about rising gasoline prices and not crude per se, he may still prevail: that's because RBOB gasoline futures have surged 42 percent so far this year, and "the gasoline market [has] moved up on retail maybe 60 to 90 cents [per gallon] in some of those red states."

Kloza said, "We've had most of the rally in gasoline; we're probably nearing the peak for this first half of the year for gasoline futures, and we're not going to see many more increases east of the Rockies for prices at the pump."

But as for crude, Kloza predicts a substantial bullish market in the latter half of 2019: "The reality is the second quarter is shaping up to be a pretty solid quarter where demand for crude outpaces supply,[and] we're probably going to see higher crude prices a month from now," with WTI trading mostly in the $60s in second quarter and Brent rising at least $10 above current levels.