Trump's Tweet Falls On Deaf Ears, Crude Rises To 3-Year High

As we know, U.S. President Donald Trump loves to tweet and has quite a loose-cannon approach toward it. After the twitter tussle between the President and Amazon.com, Inc. (NASDAQ:AMZN) early this month, Trump attacked OPEC — The Organization of Petroleum Exporting Countries— blaming it for artificially hiking oil prices, post which crude prices tumbled; albeit temporarily.

The energy market has witnessed extreme volatility in terms of prices over the past three years. However, the market has finally recovered from the historic lows to comfortably trade at more than $60 a barrel since the start of this year. Crude has been well supported by a variety of catalysts, including strong demand and continued production curbs from OPEC and its allies.

Since 2014, major oil producing countries whose economies depend heavily on the resource revenue, have been hugely affected by the oil slump caused by the supply glut. Hence, OPEC members as well as other major non-OPEC countries entered into an agreement in late 2016 to curb oil production in an attempt to rebalance the market. The continued efforts of OPEC have led to the gradual recovery of oil prices.

However, it seems that the rally in oil prices on the back of OPEC’s commitment to curtail production has not gone too well with President Trump. OPEC has hiked gasoline prices in the United States and rising energy costs may lead to inflation. Trump took to Twitter on Apr 20 to express his anger, blaming OPEC for artificially inflating oil prices.

Trump’s OPEC Tweet Leaves No Lasting Impact

His tweet read: “Looks like OPEC is at it again. 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!”

This is the first time that Trump lashed out at OPEC on social media during his presidential term. The tweet came as the OPEC and non-OPEC members met in Jeddah, Saudi Arabia, to reaffirm their agreement in order to keep output limited. The meeting determined that compliance is at its highest level ever.

Following Trump’s tweet, crude prices came under much pressure, dropping to $67.50 a barrel for WTI and $72.83 for Brent. However, by the end of the day it moved higher, rebounding from early losses, to close at $68.38 a barrel (WTI) and $74.07 a barrel (Brent).

In fact, the impact of Trump’s tweet fizzled out too soon with both WTI and Brent crude prices pivoting higher yesterday to touch their three-year highs at $ 68.64 a barrel and $ 74.71 a barrel, respectively.

Notably, the Energy Select Sector SPDR — an assortment of the largest U.S. energy companies — also rose 0.61% as of Apr 23. The two energy representatives in the 30-stock Dow Jones industrial average, ExxonMobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) , added 0.72% and 1%, respectively. Both these supermajors carry a Zacks Rank #3 (Hold). You can see Zacks Investment Research

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

Written By: Zacks Investment Research