- Crude oil futures have spiked in early Asian trade, gaining more than 1%.
- The move follows a report that OPEC producers are in no rush to boost production levels further.
- ANZ Commodity Strategists describe global crude markets as “tight as a drum” at present.
Crude oil futures have spiked in early Asian trade on Monday, a move unlikely to be welcomed by US President Donald Trump who took to Twitter late last night to express his displeasure at recent price gains.
“The OPEC monopoly must get prices down now!” Trump tweeted on Thursday.
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember.”
Despite Trump’s desire for OPEC producers to take action to lower prices, the cartel signaled over the weekend that it will boost output only if its customers requested it.
“Our plan is to meet demand,” Saudi Energy Minister Khalid Al-Falih said after meeting with fellow OPEC ministers in Algiers on Sunday, according to reports from Bloomberg. “The reason Saudi Arabia didn’t increase more is because all of our customers are receiving all of the barrels they want.”
Al-Falih added that Saudi Arabia, the cartel’s largest producer, still expects to pump more crude in September and increase output again in October.
The lukewarm response to Trump’s tweet has seen global crude futures spike in Asian trade with both Brent and WTI front-month contracts jumping more than 1% to $79.88 and $71.60 per barrel respectively.
Both contracts now sit within touching distance of the multi-year highs struck earlier this year.
The September quarter of the year is typically the strongest for global crude demand, a situation that has been exacerbated this year by the looming reintroduction of economic sanctions on Iran from early November, including the nation’s crude exports, contributing to recent strength in prices.
“OPEC is struggling to battle through a perfect storm of strong demand and bigger-than-expected supply losses,” said Daniel Hynes and Soni Kumari, Commodity Strategists at ANZ Bank last week.
“Despite OPEC agreeing to increase production with Russia in June, the market continues to tighten.”
Accompanied by seasonal strength in demand, especially in large emerging markets such as China, India and Brazil, they said it’s left the global crude market as “tight as a drum” with price risks seemingly to the upside.
“With demand remaining strong in the short term, we still see oil balances constructing higher oil prices.”
There’s more at Bloomberg here.
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