Summary:
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Oil lower on the day after Trump tweets move the market lower
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OPEC sources reported to be unlikely to agree any increase
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Market remains below key resistance around 80.0 mark
Donald Trump has caused a fairly sharp move lower in the price of Oil this afternoon after the US president tweeted that OPEC should push the price lower. The message on social media was a clear attempt to influence the market and it could well be a case of Trump looking to lower the price of gas ahead of the mid-term elections in November. Furthermore this isn’t the first time that Trump has complained about high oil prices, and there are a couple of options that he could do if he decides to make a sustained push on this.
Trump’s took to social media to voice his displeasure at the high oil price and called on OPEC to bring the market lower. Source: Twitter
The price of Oil made a clear move lower after Trump’s comments with the market falling almost exactly $1 in the 60 minutes that followed. Source: xStation
Trump’s comments are unlikely to hold too much sway amongst OPEC members and coincidentally not long after his remarks there were reports from the group that they are unlikely to increase output anytime soon. OPEC + members will be meeting this weekend in Algiers and are source reports state that there won’t be any changes to the current arrangement which was last update in June - this story likely came before Trump’s tweet however.
The main issue for the cartel at present is the drop in Iranian production due to US sanctions and whether they can Saudi Arabia and others can increase their output to offset this shortfall - which it appears they are either unable or unwilling to do. A release of some of the US strategic petroleum reserve (SPR) would be the most dramatic short term decision that Trump could make to send the market lower, which would see the market flooded with additional crude.
The market has dropped below the Ichimoku cloud on H1 following the news which could be seen to indicate the short term trend has turned lower. Swing support could be found around 77.50 but if shorts can push down through this then a larger move towards 75.65 can occur. Source: xStation
