Oil futures slid sharply on Friday after a worried President Donald Trump issued pleas to OPEC to lower prices.
The market nerves over Trump’s tweets distracted investors from the news that American companies shut down 20 oil drilling rigs last week in the largest weekly fall for years.
That normally would have helped oil prices higher, but instead, they fell by close on 3% for US West Texas Intermediate crude futures.
“Gasoline prices are coming down. I called up OPEC, I said you’ve got to bring them down. You’ve got to bring them down,” Trump told reporters Friday.
But oil prices fell and fell after OPEC Secretary General Mohammed Barkindo told media he hadn’t spoken with Trump, and Saudi Arabia’s energy minister Khalid al-Falih reportedly said the same according to a report in the Wall Street Journal.
Then at the end of the session, as oil prices were settling, Trump again tweeted – repeating his claim that he “spoke to Saudi Arabia and others about increase oil flow.”
West Texas Intermediate crude for June delivery fell $US.91, or 2.9%, to settle at $US63.30 a barrel in New York.
That left it down 1.2% for the week, ending seven consecutive weeks of gains.
June Brent crude futures – the global benchmark – lost $US2.20, or about 3%, to settle at $US72.15 a barrel in Europe, for a tiny weekly gain of around 0.3%. That was the 5th weekly rise in a row.
Earlier this week, prices for WTI and Brent crude had hit their highest settlements in nearly six months off the back of Trump’s decision to end the exemptions 8 countries (led by China, India, Japan, and South Korea) have from Iranian oil sanctions imposed by the US.
Those exemptions are due to end May 1 and so far the Trump administration has sat back and watched global prices rise and only fitfully tried to get more crude produced by OPEC.
Trump claimed Saudi Arabia and the UAE will help make sure the oil market is well supplied, but there has been no confirmation whatsoever that this will happen.
The sharp, 20 rig fall last week is a big negative for a fall in prices. Baker Hughes reported that active rig numbers fell for a second week in a row and the 805 in operation as at last Friday is the lowest for a year.
Including active gas rigs, the total number of US rig fell 21 to 991, down 30 from the same week a year ago. The 805 rigs looking for oil was 20 down from the same week a year ago. Oil rig numbers are down from 873 at the end of 2018.
Some of the falls is due to greater operating efficiencies by fracking companies, but most are due to cost cutting as US daily production remains around 12.2 million barrels a day.
There are few signs of the next big boost in US production that would take daily output to the forecast 12.4 million barrels a day towards the end of this year.
