Crude Price Ignores Trump Tweets on OPEC Supply Cuts

This week, the price of crude oil has been relatively unmoved as traders continue to focus on a number of things. First, they are focusing on the global demand at a time when the global growth fears are rising. This year, major organizations like World Bank, IMF, OECD, and central banks like Fed, ECB, RBA, and RBNZ have issued statements lowering their forecast for the year. Last week, in the United States, there was an inversion of the yield curve, which is usually viewed as a sign that a recession may happen.

Second, investors have continued to focus on the supply cuts from OPEC. The cuts emerged after the December meeting between OPEC and Russia. At the time, the price of crude had declined sharply, which led to an intervention from the producers who account for more than half of the global production.

Third, there are concerns about Venezuela. This year, the Trump administration imposed a number of sanctions that have helped reduce the amount of crude oil produced in the country. This week, the country’s presumed president was banned by the government against running for president for another 15 years. He is also banned from other political actions in the country. This may increase the tensions that are there between the US and the Venezuelan government. This is because the US and other Western countries have recognized him as president already.

Fourth, data from the US this week was mixed. Last week, Baker Hughes released a report showing that the number of rigs had declined in the past week. In fact, the rig count has been on a downward trend this year. This week, data from the country showed that inventories had moved up. The data from American Petroleum Institute (API) showed that inventories rose by 1.9 million after declining sharply in the previous week. This was followed by that of the Energy Information Administration (EIA), which showed that inventories had risen by 2.8 million barrels.

Yesterday, Donald Trump sent a tweet asking OPEC to start boosting production. This was the second such Tweet from the US president. However, it is unlikely that OPEC will listen to Trump now that the supply cuts have helped rebalance the prices. In addition, the whole debate on the killing of Jamal Khashoggi has eased a bit.

Yesterday, the price of WTI crude oil declined to $58.20 after Donald Trump sent the OPEC tweet. The price then recovered slightly and reached a high of $60. In the chart below, the WTI pair is slightly above the 21-day and 42-day moving averages. The RSI has climbed closer to the overbought levels. In the near-term, the pair will likely continue moving upwards.

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