Oil fell in New York after U.S. President Donald Trump criticized OPEC and said crude prices are “artificially Very High.”
The comments came as the Organization of Petroleum Exporting Countries and allies including Russia showed willingness to further tighten oil markets and boost prices.
Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!
— Donald J. Trump (@realDonaldTrump) April 20, 2018
“Looks like OPEC is at it again,” Trump said on Twitter. “Oil prices are artificially Very High! No good and will not be accepted!”
Oil ministers from Saudi Arabia and the United Arab Emirates pushed back on the charge, saying there’s no such thing as artificial prices and that current market levels reflect geopolitics. Crude has rallied in recent weeks as output cuts from OPEC and its allies were compounded by heightened geopolitical risks, including the possibility of renewed U.S. sanctions on Iran.
“Trump’s decision on Iran in a few weeks time is going to play as much a part as what he’s accusing OPEC of doing,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. “This is not just OPEC doing what they’re supposed to be doing; we shouldn’t take our eye off the ball that the market is rallying on geopolitical risks.”
Meeting in Jeddah, a committee of OPEC and other oil producers found high levels of compliance with the production curbs. Still, there’s capacity for prices to rise beyond this week’s three-year high, according to Saudi Energy Minister Khalid Al-Falih, who said cooperation between producers would continue into 2019.
Russian Energy Minister Alexander Novak said the output deal has stimulated U.S. oil production and helped “restore the industry of Texas.”
West Texas Intermediate crude for May delivery erased gains to trade 0.6 percent lower at $67.90 a barrel as of 8:28 a.m. in New York. That contract expires on Friday. The more active June contract fell 0.9 percent to $67.72 a barrel.
Brent crude for June delivery fell about 69 cents at the time of the tweet, before trading down 0.7 percent at $73.29 a barrel. Both benchmarks are still set for weekly gains.
President Trump said in his tweet that there are “record amounts of oil all over the place, including the fully loaded ships at sea.” The comments come in the same week that U.S. oil inventories fell below their five-year average for the first time since 2014.
“Ninety-eight percent of what politicians say about oil should just be disregarded immediately and this falls in there,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
Twitter has emerged as a preferred medium of communication for Trump, allowing him to directly reach his 51 million followers and countless more through news coverage. On April 2, Amazon.com Inc. shares dropped after Trump said the company’s deliveries cost the postal service and drive retailers out of business.
Other oil-market news and OPEC comments:
Inventory levels still significantly higher than before the downturn, Saudi Energy Minister Al-Falih said, after the meeting in Jeddah.
Global oil demand growth in the first three months of this year is forecast to reach 2.55 million barrels a day, the strongest year-on-year expansion since 2010, as demand has come in line with its optimistic expectations so far in 2018, according to Goldman Sachs Group Inc.