Oil Jumps Again As OPEC Picks Up Where Trump Left Off
Crude prices rose as much as 10% on Friday as jawboning by OPEC members speaking anonymously to the media helped to add to the previous session’s gain of more than 25%. Thursday’s rally came on the back of Trump’s tweets that he had brokered a deal for Saudi Arabia, Russia and other oil producers to cut between 10 million and 15 million barrels of supply from daily world output.
The Kremlin said on Friday that Putin will meet Russian oil industry executives and officials today to discuss the situation on the world energy markets.
West Texas Intermediate, the New York-traded benchmark for U.S. crude, was up $1.72, or 6.8%, at $27.04 per barrel by 1:23 AM ET (17:23 GMT), after Thursday’s $5 gain. The session high was $28.55. Just on Monday, WTI hit 18-year lows of $19.27.
Brent, the London-traded global benchmark for crude, was up $2.78, or 10%, at $32.72 per barrel. Brent settled up 21% in the previous session.
Crude prices also jumped on data showing that drillers had cut the number of rigs actively pumping oil by 62 this week, the most in a week since 2015.
Despite the two-day rally, some analysts and market participants remained wary of Trump’s remarks.
This was because there was little evidence to suggest that the Saudis and Russians would be willing to shoulder the bulk of a 10-15 million bpd cut, which would account for 5%-7.5% of global output, now standing at around 200 million bpd. Coordinated Saudi-Russian cuts since 2016 under the OPEC+ pact ended unceremoniously early last month, and the two oil titans had been engaged in a production-and-price war in recent weeks.
Asked at a news conference on Thursday on where he got his numbers from, Trump implied that his information came from calls placed to Saudi Crown Prince Mohammad bin Salman and Russian President Vladimir Putin, as well as conversations between those two individuals.
But a spokesman for Putin denied that the Russian leader had spoken to the Saudi crown prince since the price war between the two countries began. Saudi oil officials also privately told The Wall Street Journal that Trump had exaggerated the potential cut numbers.
OPEC delegates, however, attempted to lend credibility to the president on Friday, suggesting he wasn’t off the mark.
Bloomberg quoted one OPEC delegate as saying that a global cut of 10 million barrels a day was “a realistic goal”.
“The U.S. needs to contribute from shale oil” to the cuts, Reuters quoted another OPEC source as saying.
Industry regulators in Texas, the largest U.S. oil producing state that churns out some 4 million barrels per day, have indicated they are ready to work with their oil drillers for cuts.
But Trump, who will meet CEOs of some of the biggest oil companies such as ExxonMobil and Chevron at the White House on Friday, said at Thursday’s news conference that he offered no cuts on behalf of American industry — ostensibly due to U.S. antitrust regulations that forbid any coordination of production controls.
White House Economic Adviser Larry Kudrow, who arranged for Trump’s meeting with the oil company CEOs, said in media interviews on Friday: “I think… oil companies, seeing a decline in price are going to pull back on production. That’s just common sense.”
“We don’t dictate oil policies to our oil and gas sectors,” Kudlow added.