OPEC Plus Snaps Back

Sometime tweets go your way and sometimes they don’t. OPEC snaps back at Presidents Donald Trump’s tweet that OPEC should take it easy on the oil market, saying that they already are taking it easy. This comes as Russia says they are kicking into high gear complying with their share of the agreed-upon production cuts. Russian Energy Minister Alexander Novak said that Russia has cut output by 140k-150k barrels a day and is fully complying with OPEC+ deal.

Add to that a very bullish American Petroleum Institute supply report that showed a 4.2 million barrel drop in crude supply versus expectations of a 3.589-million-barrel build, gasoline draws of 3.8 million barrel drop, almost twice what they were looking for, but a 40,000-barrel increase in distillates and a 2-million-barrel increase in the Cushing hub.

Also lending support, Increased tensions between India and Pakistan and reports that hardly anyone is buying Venezuela’s heavy oil and you have set the stage for an oil price recovery. We still have the Energy Information Administration (EIA) report to get through and if it shows the same data that API showed it could set the stage for a big-time oil rally.

Let us start with OPEC. President Trump caused the biggest oil sell-off of the year 2 days ago, tweeting that “Oil prices getting too high. OPEC, please relax and take it easy. The World cannot take a price hike - fragile!” OPEC's de-facto leader Saudi Arabia's Energy Minister Khalid al-Falih,  responded, "We are taking it easy." "The twenty-five countries are taking a very slow and measured approach. Just as the second half of last year proved, we are interested in market stability first and foremost." Besides that, he alluded to an oversupply that was probably caused in part by Trump pressuring the cartel to raise output last year to replace barrels of Iranian oil that Trump sanctioned but then granted waivers and said that removing 1.2 million barrels from the market each day, was appropriate. Or in other words, if you think we are going to raise output because of your tweet, you better tweet yourself.

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