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Trump vs oil. President wins again

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Brent couldn’t keep close to the annual maximum at $75.5/b. Initially, there was a downward correction to $74, and after that the quotes fell by almost 3.5% during the Friday session, and closed at $71.6. At the beginning of the new week, black gold is trading in a narrow price range. Bulls are trying to push it higher, but still can’t get over $72.

At the end of last week, the fundamental background was quite favorable for growth. First, the supply of oil from Russia to Europe via its key «Druzhba» pipeline was suspended due to its pollution. Secondly, the market expected a possible drop of export from Iran. Baker Hughes published its rig count data, which did not add to bullish sentiment. Although the number of rigs fell by 20 units to a 13-month low.

However, the main driver of the price drop was the President of the United States. Donald Trump said that he had appealed to the Organization of Petroleum Exporting Countries (OPEC) to lower oil prices. According to him, he was able to negotiate with the cartel, but later Secretary General of OPEC Mohammad Barkindo said that he hadn’t spoken to Trump. Nevertheless, this verbal intervention worked: quotes did not recover even after the statement made by OPEC. Such traders’ behavior can be seen as a harbinger of a fall.

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Source: https://olymptrade.com/
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