Crude Oil Price Spikes As Trump Readies Meeting With Oil Executives

Crude oil price rose by more than four percent after Donald Trump raised possibility of a deal between Saudi Arabia and Russia. As of this writing, West Texas Intermediate (WTI) is up by 4.5% while Brent is up by 5.6%.

In a statement yesterday, Trump said that he expected the two sides in the conflict to take serious steps to address the crisis. He also said that he wanted to bring oil prices back to where it was before. Yesterday, we reported that Russia had denied that talks with Saudi Arabia were ongoing.

In the past, Trump has favoured low oil prices. Indeed, on the day that oil prices dropped by more than 30%, the president touted it as a big saving to consumers. However, with most people working from home, it seems like those consumers are not benefiting at all.

In another news, the president will meet with oil executives to discuss the energy sector. The meeting will include executives from companies like Exxon, Chevron, Continental Resources, and Occidental. These executives are expected to press the case for more government intervention to save the sector. For example, Harold Hamm, the billionaire founder of Continental has called Trump to be more forceful to Saudi Arabia.

In addition, according to Bloomberg, China is ramping up the purchase of crude oil. The country is taking advantage of the current 60% drop in oil prices to ramp-up its reserves. According to the report, the country has asked government agencies and private companies to fill all the available storage facilities.

Still, Trump is in a difficult situation. He knows that low oil prices are beneficial to Americans but he also knows that the current levels are dangerous to American oil companies. A more forceful tone could lead to a significant jump in oil prices, which may affect his election chances.

A more relaxed tone could see many American oil companies go out of business, which would compromise America’s quest for energy independence. This has already started to happen. Yesterday, it was reported that Whiting, a shale company filed for bankruptcy. More such companies could be vulnerable as debt maturities near.

Download our Q2 Market Global Market Outlook

WTI Crude Oil Technical Analysis

Looking at the 30-minute, we see that crude oil price has bounced back from last week’s low of 19.25. The price has been moving in a sideways direction as the market digest the incoming news. Also, the pair has been forming a symmetrical triangle pattern while volatility, as measured by the Average True Range (ATR) has been easing. I expect the pair to see a significant breakout soon, which will see it either retest last week’s low of 19.25 or last week’s high of 21.87.

Don’t miss a beat! Follow us on Telegram and Twitter.

More content