Oil prices fall 3% after Trump tweets about high prices
Oil futures dropped just hours after reaching 2019 highs after US President, Donald Trump, tweeted about the commodity’s prices rising too much. West Texas Intermediate(WTI) was down 3% and Brent crude futures plummeted $2.03 after Trump’s tweets about the Organisation of Petroleum Exporting Countries(OPEC).
Why did oil prices drop?
Brent and WTI declined after Trump complained on Twitter about the price of oil.
‘Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!’ tweeted Trump.
After his tweet, oil prices dropped after rising because of a supply cut from OPEC countries and US sanctions on crude from Venezuela and Iran. Coiln Cieszynski, chief market strategist at SIA Wealth Management, noted that Trump can influence oil futures.
‘Investors have been getting a clear reminder of the sway U.S. President Trump still holds; how a comment or tweet on a key economic issue can really swing sentiment,’ said Cieszynski.
What’s next for oil futures?
Oil futures could become volatile because of global political tensions. Harry Tchilinguirian, global strategist at BNP Paribas, warned that the oil supply is at risk because of upheaval in Venezuela and Libya.
‘Supply risk is ever present with Venezuelan tensions brewing a notch higher. The National Oil Corporation in Libya refusing to start production at the El Sharara field’, said Tchilinguirian.
Oil prices could become unpredictable because of global factors, but may not have such a large effect on the US. According to Jasper Lawler, head of London Capital, increased domestic production could shelter the US from crude volatility.
‘US output hitting records of 12 million barrels per day is countering the positives from easing trade tensions, sanctions on Iran and Venezuela and OPEC cuts,’ said Lawler.
Investors will continue to monitor the oil market- and Trump’s tweets- to see how the commodity’s prices will move in the future.
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