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Several members of the Organization of the Petroleum Exporting Countries responded to the tweet, saying prices were not artificially inflated.
Delegates at an OPEC/non-OPEC monitoring committee meeting in Jeddah, Saudi Arabia said oil prices were higher partially because of global political tensions, mentioning sanctions on Venezuela, threats to the Iran nuclear agreement, strikes on Syria and saber-rattling over North Korea.
“We don’t have any price objective in OPEC, and not in this joint endeavor with non-OPEC,” Barkindo said on Friday, in response to Trump’s tweet. “Price is not our objective. Our objective remains restoring stability… on a sustainable basis.”
The group is slated to meet in June to decide next steps after reducing output since January 2017 along with other producers, including Russia.
“We have a difficult time seeing how OPEC would in any way be swayed here in terms of changing course, in terms of policy,” said Michael Tran, commodity strategist at RBC.
OPEC’s output fell in March to an 11-month low, according to a Reuters survey. The cartel has targeted the five-year average of inventories in 35 Organization for Economic Cooperation and Development (OECD) countries as a barometer for the deal’s success. As of mid-April, those inventories were 2.85 billion barrels, or 43 million more than the five-year average; a year ago, it was 268 million barrels above that benchmark.
This week, crude futures benchmarks Brent LCOc1 and U.S. West Texas Intermediate (WTI) CLc1 hit their highest since November 2014, with Brent touching $74.75 and U.S. crude $69.56 per barrel.
Trump is “just trying to relate to his base when it comes to the retail gasoline prices, so he’s blaming OPEC for this,” said Josh Graves, senior market strategist at RJO Futures in Chicago.
Brent crude futures were at $73.66 per barrel at 12:01 p.m. EST (1601 GMT), down 13 cents from their last close. WTI futures were down 6 cents at $68.19 a barrel. [O/R]
Beyond OPEC’s supply management, crude prices have been supported by expectations that Washington will re-introduce sanctions on OPEC-member Iran, and might expand sanctions against Venezuela after that country’s presidential elections next month.
Hedge funds and other speculators hold a record level of bullish bets in Brent, on expectations of further price rises.
The U.S. government cannot legally influence oil prices other than through releasing oil from its strategic reserves which it does occasionally.
This year’s budget agreement includes the sale of about 100 million barrels of crude oil – about 15 percent of the reserve – as U.S. oil production recently hit a record at more than 10 million barrels a day. Analysts said it signaled Washington was less concerned about global shortages.
“Washington has fully given up this idea of scarcity. You don’t get to the point of selling your strategic reserves to balance your budget if you think the world is short,” said Kevin Book, managing director at Clearview Energy Partners. Source: Reuters; ad