President Trump’s Speech at World Economic Forum Sends Oil Prices Lower

Yesterday, oil prices took a hit following President Trump’s virtual address at the World Economic Forum in Davos. Trump called for lower oil prices and mentioned plans to ask Saudi Arabia and OPEC members to increase output to bring prices down. This move is seen as a strategy to pressure Russia and potentially help end the conflict in Ukraine. However, convincing OPEC to boost output may prove challenging due to various factors, including the alliance between Russia and OPEC members through OPEC+ and higher fiscal breakeven oil prices for key members like Saudi Arabia.

The latest data from the EIA’s weekly oil report showed a decline of 1.02 million barrels in US commercial crude inventories, marking the ninth consecutive week of decreases. Despite refiners cutting run rates, stocks are now at their lowest level since March 2022. The decline in inventories was driven by maintenance activities in the US Gulf Coast. Additionally, gasoline stocks increased while distillate stocks fell.

On the natural gas front, European prices, particularly TTF, are trading close to EUR50/MWh. Concerns over EU gas storage persist as inventories are below 58% full, well below last year’s levels and the five-year average. The market is worried about refilling storage during the injection season, especially with the lack of incentives in the forward curve to store gas for next winter.

In conclusion, President Trump’s remarks have had a direct impact on oil prices, with implications for global markets and geopolitics. The ongoing dynamics in the energy sector, including declining crude inventories and storage concerns in Europe, indicate potential volatility ahead. Investors and consumers should stay informed and monitor these developments closely to make informed decisions about their finances and energy consumption.