Puppetmaster Trump Spurs 3% Oil Rise As Strike Force Sails To Middle East

Trading patterns are almost completely driven by headlines, not fundamentals: File Image/Pixabay

Friday's dramatic shift in oil trading patterns demonstrated yet again the susceptibility of oil traders to virtually anything U.S. president Donald Trump says or does; this time, the commodity rose almost 3 percent on the strength of the brash billionaire announcing that an armada was heading towards the Middle East, presumably to pressure Iran.

Brent settled up $1.82, or 2.8 percent, at $65.88 per barrel, and West Texas Intermediate settled up $1.71, or 2.9 percent, at $61.07.

In addition to an aircraft carrier and guided missile destroyers scheduled to arrive in the Middle East in a few days, Washington on Friday also imposed sanctions on nine vessels and eight related firms involved in transporting Iranian oil and petroleum products.

The session's trading was noteworthy in that the previous session saw a 2 percent drop in prices due to the perception that Trump was backing away from hostilities in the Islamic republic, as well as vowing not to use force to acquire Greenland.

Another bullish development was Russia, with media reporting that the Kremlin "poured cold water" on hopes of a breakthrough to end its war in Ukraine.

Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, said, "The bottom line is that geopolitical headlines remain plentiful and uncertainty remains exceptionally high….heading into the weekend, crude is likely to trade in whichever direction the headlines push it.

"For now, recent shifts in military assets and official commentary appear to be leaning back toward renewed concerns over potential military action involving Iran."

Meanwhile, Chevron stated on Friday that output at Kazakhstan's Tengiz oilfield has yet to resume after a shutdown was imposed due to a fire; JP Morgan estimated that Tengiz could remain offline for the rest of the month, meaning Kazakhstan's crude output may average only about 1 million barrels per day (bpd) in January compared with a normal level of 1.8 million bpd.

In other oil news on Friday and following Amin Nasser, chief executive officer at Saudi Aramco, stating that "Oil glut predictions are seriously exaggerated," SLB, the world's largest oilfield-services provider, said the worst may be over for the global oil market; the company predicted a gradual ramp-up in drilling activity in major regions.