Oil Slumps, Then Shrugs, as Trump Tweets Again About 'Too High' Prices

By Barani Krishan

Investing.com - Trump has started tweeting again on oil, but the market's decided it's not worth its while this time.

Politically re-energized following the submission of the Mueller report, President Donald Trump sent out on Thursday his second tweet of the year on oil, calling on OPEC to raise production and bring down prices of the commodity. The market initially sunk as much as 1% as the president reignited his battle with OPEC. But by the close, crude had recovered most of those losses, settling just slightly lower.

While New York-traded West Texas Intermediate crude finished down for a second-straight day, the drop was just 11 cents, bringing it to a close of $59.30.

London-traded Brent, the global oil benchmark, fell just 1 cent to settle at $67.30.

Trump's tweets were among the factors that contributed to last year's 25% crash in oil prices.

WTI is up nearly 31% this year and Brent is up 26%. AAA's daily survey of retail gasoline prices shows the U.S. average at $2.685 a gallon, up 18.5% this year.

Like the battles he wages on many other fronts, the president has relied on Twitter to try and temper the rally in crude and reduce fuel costs at the pump for Americans. With OPEC, he started in April last year, ahead of the U.S. midterm elections in November.

In Thursday's tweet, he said: "Very important that OPEC increase the flow of Oil. World Markets are fragile, price of Oil getting too high. Thank you!"

It was similar to his other message to the producer group on Feb. 25, telling it not to push the markets up too much with its supply cuts. “Prices getting too high," Trump said then. "OPEC, please relax and take it easy. World cannot take a price hike - fragile!”

But compared to his last tweet on oil that pulled crude prices down as much as 3%, Thursday's market action showed the president may be losing his influence over traders as well as OPEC.

In fact, even after his February tweet, Saudi Arabia, the de facto leader of OPEC, intensified output cuts instead of raising production. The kingdom's Energy Minister Khalid al-Falih even told Trump, "Yes, we are taking it easy."

"The president should remember that overall strong oil prices are a net positive for the economy, according to his own advisors," said Price Futures Group energy analyst Phil Flynn, a Trump supporter who has been critical of the president's campaign against OPEC.

Trump's tweet aside, the market was also somewhat impacted by worries about a global economic slowdown that could impact oil demand. Also weighing on prices was a Reuters report that Saudi Arabia was having a hard time convincing Russia to continue in their OPEC+ production cutting pact beyond September.

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But tweets aren't the only tools Trump has to fight OPEC and bring crude prices lower. He could also allow buyers of Iranian oil greater imports when the current sanction waivers they have expire in May. If necessary, he could also authorize the sale of oil from the U.S. Strategic Petroleum Reserve.

The oil rally itself could face stronger headwinds going forward as worries of a potential U.S. recession and an economic slowdown from China to Europe take hold.