Oil prices fall below $ 69 on Tuesday afternoon to the lowest level of seven months. The Oslo Stock Exchange was taken out by suction and dropped by 0.90 percent.
"Donald Trump yesterday definitively tweeted it to a broad side," says analyst Bjarne Schieldrop of SEB.
Trump made a clear message about the Opec oil cube about what he hopes to do in the future.
"Hopefully, Saudi Arabia and Opec will not stop oil production. Oil prices should be much lower on the basis of offers, he wrote on Twitter.
"I was surprised"
The announcement was made after Saudi Arabian Energy Minister Khalid Falih on Monday said he would reduce oil production to repair the market that was "overhauled".
"It is clear that Trump is very focused on how the Iranian exports have damaged the Iranian economy and that oil prices are as low as possible, but if Iran reduces oil exports by 20 percent while raising oil prices by 20 percent, it is clear that it's not that painful, says Schieldrop.
"But I was surprised to continue to exert pressure on it." There is a clear debate between Donald Trumpe and Saudi Arabia, apparently wishing oil prices to be as low as possible to exert pressure on Iran, but there is a limit to what can to accept Saudi Arabia. Saudi people should also live, he says.
Saudi Arabia, which is heavily reliant on oil revenues, has previously said it wants a price of more than $ 70, but after the murder of Saudi journalist Jamal Khashoggi, the political influence of the king was weakened. So they are careful to give up Trump, says Schieldrop.
«Confusion and schizophrenia»
The second possible explanation for declining oil prices is that people are stupid.
Oil stocks in the US have recently increased sharply as pipeline infrastructure problems have occurred in the country. This makes American light oil accumulated and you get a much bigger offer and therefore a lower price of WTI oil (American light oil). Investors can interpret this fact because this offer is increasing in relation to demand, and you therefore do the right thing. Prices are falling.
"But global stocks have gone as of early October," Schieldrop said.
– Then are investors stupid?
"The market is usually a little stupid, that's it, he says.
Schlieprop says global oil stocks have fallen by 40 million barrels this year, and that oil in the North Sea, used as a reference for oil trade around the world, is tracking the drop in US light oil fuel.
"There is some confusion and schizophrenia in this market," he says.
Do not think the Opec will bend
There is no belief at all that Opec and the cooperative countries of the cartel are willing to give up what they have achieved because they have decided to reduce production by the end of 2016 in order to bring large quantities of oil into reserves. Since then, oil prices have risen by several tens of dollars.
"There is no one of these manufacturers who are interested in growing global stocks, which means that global stocks get overpowered by oil, which means you get a low spot price (market price now red.anm.) Against longer contracts, ie you have to sell your physical oil for a discount on longer contracts, he says.
"We are going to move towards the Opec meeting in December and I'm sure we will see a statement that, of course, we will not have a North Sea oil contingent," he said.
Contango is an expression that means that the price at which goods are traded at this time is lower than a futures contract, ie the Pre-Sale Commodity Price. Therefore, in the continental market, it will not be for you to sell your oil here and now.(conditions)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share your affairs with a link that goes directly to our site. Copying or any other form of use of the whole or part of the content may only be in writing or permitted by law. Other conditions can be found here.