Donald Trump mentioned OPEC for the first time ever in a tweet late last week and that got the oil market in a bit of a twitter, but his outburst was then dismissed as a rant.
"OPEC at it again”, Trump tweeted.”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!” Trump wrote on Twitter.
It was unclear what triggered the tweet, Trump’s first mention of OPEC on social media during his term, but it ignored perhaps the most pertinent fact that the more than doubling in oil prices in the past 15 months or so has in turn pushed US oil production to record levels, something Trump has also boasted about.
The weekly production and stocks report from the US Energy Information Administration (EIA) confirmed that with estimated total domestic US crude production up by 15,000 barrels a day last week to 10.54 million barrels a day.
That’s a record and is up near 14%, or 1.29 million barrels a day over the past year. The EIA sees US crude production rising past 10.7 million barrels a day and reaching 11 million barrels by later this year or in early 2019.
That would not have happened so quickly (or dramatically) without the price boost underwritten by the production cap between OPEC and Russia. US producers, most of whom are independents and Trump supporters, have been the biggest beneficiaries of the price surge and production cap.
Without the production cap of 1.8 million barrels a day from most of OPEC (especially the Saudis) and Russia, oil prices would not have risen so far (they would have increased as world economic activity improved in the same time), but the surge to four year highs we saw last week would not have happened.
Trump’s tweet my have been prompted by reports Russia and OPEC members will meet in June to discuss extending the cap into 2019.
Last week saw global crude futures benchmarks Brent and US indicator, West Texas Intermediate (WTI) hit their highest since November 2014, with Brent touching $US74.75 and WTI $US69.56 per barrel.
Friday saw May West Texas Intermediate crude edge up by 9 cents, or 0.1%, to settle at $US68.38 a barrel in New York to be up 1.5% for the week. June WTI crude which became the front-month contract the settlement, added 7 cents, or 0.1%, to $US68.40 a barrel.
June Brent crude futures rose 28 cents, or 0.4%, to $US74.06 a barrel, marking another finish at the highest since November 2014. It rose 2% for the week.
And oil services group, Baker Hughes on Friday, reported that the number of rigs being used to look for oil rose the third week in a row – by 5 to 820 this week. The total active US rig count, which includes oil and natural-gas rigs, climbed by 5 to 1,013, which are both three year highs.
