Oil slips after Trump complains about Opec’s plan to cut supply

Singapore — Oil prices fell by about 1% on Tuesday, with Brent crude sliding below $70 and WTI below $60 a barrel, after US President Donald Trump put pressure on Opec not to cut supply to prop up the market.

The fall came amid a broad market sell-off in Asia and before that on Wall Street, while the dollar hit a 16-month high on Tuesday, making oil imports more expensive for any country using other currencies at home.

US West Texas Intermediate (WTI) crude oil futures were at $59.15 a barrel at 2.14am GMT, down 78c, or 1.3% from their last settlement.

International benchmark Brent crude oil futures were at $69.47 a barrel, down 65c, or 0.9%, from their last close.

Both oil price benchmarks have shed more than 20% in value since early October.

“Sky-high production in the US, coupled with incremental barrels coming from Saudi Arabia and Russia, is starting to impact oil market balances. As such, crude oil inventories are starting to increase once again,” Bank of America Merrill Lynch said in a note.

The bank added that it expected US crude production, already at a record 11.6-million barrels a day, to break through 12-million barrels a day in 2019, making the US “energy independent”.

Top crude exporter Saudi Arabia has watched with alarm how supply is starting to outpace consumption, fearing a repeat of 2014’s price crash.

Saudi Energy Minister Khalid al-Falih said on Monday that oil cartel Opec agreed there was a need to cut oil supply in 2019 by about 1-million barrels a day from October levels to prevent oversupply.

Dutch bank ING said that, given the abundance of global supply as well as the threat of an economic slowdown, “cuts over 2019 are unavoidable … as it is becoming clearer that as we move closer towards 2019, the market will see a sizeable surplus at least over the first half of 2019”.

US President Donald Trump, however, did not like the rhetoric coming from his political ally in Saudi Arabia, and tweeted about it.

Source: businesslive.co.za