Oil is stumbling after a 30 percent rally since Christmas Eve as speculation swirls over whether OPEC will heed Donald Trump’s call to temper prices.
Futures in New York extended losses after sliding 3.1 percent on Monday, the most in four weeks. While crude is still over 25 percent below a four-year high in October, the U.S. president tweeted on Monday that prices are getting too high and called on the Organization of Petroleum Exporting Countries to “relax and take it easy.” Oil’s recovery in 2019 has been propelled by output curbs by OPEC, with top member Saudi Arabia making the deepest cuts.
Last year, the Saudis obliged when Trump urged that taps should be kept open as his administration sought to shrink Iranian exports to zero via sanctions. Then the U.S. eased its hard-line demand that the Persian Gulf state’s customer halt purchases and gave a number of them waivers to buy limited quantities. That American move triggered a 38 percent collapse in crude in the fourth quarter, dealing a blow to the economies of OPEC members.
The group has learned from that mistake and is unlikely to repeat it, according to two oil officials in the Gulf region who asked not to be identified. Still, investors are wary over whether OPEC will be able to defy Trump, who could enforce legislation that shakes the organization to its foundations. The Saudis, meanwhile, are also facing political backlash in the U.S. for the murder of Washington Post columnist and critic Jamal Khashoggi.
West Texas Intermediate for April delivery traded at $55.17 a barrel on the New York Mercantile Exchange, down 31 cents, at 12:06 p.m. in Singapore. The contract decreased $1.78 to $55.48 on Monday, the lowest level since Feb. 14.
Brent for April settlement slid 15 cents to $64.61 a barrel on the London-based ICE Futures Europe exchange. The contract dropped $2.36 to $64.76 on Monday. The global benchmark crude traded at a $9.46 premium over WTI.
Source : Bloomberg