Oil holds near $74 as Trump lambasts OPEC to temper price surge

Oil held near $74 a barrel as President Donald Trump’s tweet urging OPEC to pump more to temper prices did little to assuage concerns over a global crude supply crunch.

Futures in New York were little changed following US Independence Day. Trump tweeted the group is “doing little to help” reduce gasoline costs and “if anything, they are driving prices higher.”

Despite the key member Saudi Arabia reaffirming that the cartel and its allies will boost output, Goldman Sachs warned that oil is likely to lead a new rally as the market faces significant supply risks from Venezuela to Iran.

Oil this month rallied to the highest level in more than three years as the Organisation of Petroleum Exporting Countries’ output increase plan was overshadowed by supply disruptions in Libya, Canada and Venezuela.

While Saudi Arabia is facing mounting pressure from Trump to do more, America’s oil sanctions on Iran and trade frictions with China are adding to uncertainties as the planned US tariffs on Chinese goods are set to start on Friday.

“Investors are cautious since no one knows to what extent the Iranian sanctions will impact the market, and disruptions globally are taking supplies out faster than expected,” said Will Yun, a commodities analyst at Hyundai Futures in Seoul.

“President Trump’s tweets are adding to the existing concerns. All factors will push prices higher, but we’re still waiting to gauge what level it will surge to with all the uncertainties.”

West Texas Intermediate crude for August delivery traded at $73.86 a barrel on the New York Mercantile Exchange, down 28 cents, at 3:01 pm in Singapore. The contract added 20 cents to $74.14 on Tuesday, and there was no settlement on Wednesday due to the US holiday.

Brent for September settlement lost 52 cents to $77.72 a barrel on the London-based ICE Futures Europe exchange. The contract on Wednesday gained 48c to $78.24. The global benchmark traded at a $6.30 premium to WTI for the same month.

Yuan-denominated futures were little changed at 497.6 yuan a barrel on the Shanghai International Energy Exchange, after losing 1.4% on Wednesday.

President Trump wrote in the tweet that the “OPEC Monopoly must remember that gas prices are up & they are doing little to help” and that America defends many OPEC members for “very little” money.

“This must be a two-way street. REDUCE PRICING NOW!" Meanwhile, Goldman said the market will stay in a deficit in the second half of the year as actual and potential supply losses from Iran, Venezuela, Libya and Canada far exceed the proposed boost from the group and its partners.

The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!

— Donald J. Trump (@realDonaldTrump) July 4, 2018

In the latest of the US-China trade spat, China’s Commerce Ministry spokesperson Gao Feng said America’s tariffs will backfire and damage the world economy because more than half of the $34bn of Chinese exports are produced by foreign companies.

“China won’t fire the first shot,” Gao added. The Asian nation’s retaliatory tariffs will become effective “ immediately” after the US acts, according to the customs authority.

Other oil-market news:

• Saudi Arabian Oil will change its Asia crude pricing benchmark by replacing Platts’ Oman assessment with the Dubai Mercantile Exchange’s Oman futures from October 1.

• Canadian oil prices are poised to continue their slow, steady march upward next year as shipping bottlenecks ease and US refiners look north to fill the gap created by decreasing output from Venezuela, according to Deloitte.

• Iran will stop oil exports from the Strait of Hormuz, the world’s most important oil chokepoint, if the US succeeds in halting crude sales from the Persian Gulf nation, according to a Revolutionary Guards official.