On Friday, February 22, the price of WTI crude oil continued its upward trajectory as it rose to a new high for 2019 at $57.81 per barrel. After trading to a low at $42.36 on December 24, the price had rallied by 36.5%. At two minutes before 7:00 AM EST on Monday, February 25 as he prepared to depart for his second meeting with the leader of North Korea in Vietnam, President Trump tweeted:
It was not the first time the US President tweeted a message to the international oil cartel. Over the summer when WTI was rising towards its high in early October at $76.90 per barrel, President Trump warned OPEC over policies that would send the price of the energy commodity higher. With sanctions on Iran scheduled to take effect in November, the President put maximum pressure on the members of the cartel to increase their output. The tweets in September together with Saudi capitulation in the aftermath of the murder of Washington Post and Saudi national Jamal Khashoggi at the hands of Saudi security forces caused the price of crude oil to plunge.
There have not been many oil-related tweets over the recent months, but with the price moving towards the $60 per barrel at the end of last week, that ended. Around the time of the latest message to OPEC from the Oval Office, the price of crude oil turned lower.
As the ten-minute chart highlights, between 6:40 AM and 8:10 AM EST the price of crude oil fell from $57.49 per barrel to a low at $55.70. Crude oil continued to move to the downside finding an eventual low at $55.02 later in the day.
When it comes to crude oil, the power of the tweet continues to work for the US President. Social media has changed the world and its impact ripples through our everyday lives, politics, and economics. The ability for communications in a split second that reaches people all over the world is a powerful tool. The early morning tweet from the White House and reaction in the most high-profile commodity in the world is another example of how technology continues to transform markets and our daily lives.
Meanwhile, the correction in the price of crude oil may have been long overdue.
As the daily chart illustrates, both short-term price momentum and relative strength had risen to overbought territory, and open interest in the futures market had been falling as the price was rising. A decline in the total number of open long and short positions together with a rising price does not typically support the bullish trend in a futures market.
While time will tell if the President’s message to OPEC will lead to a lower price for crude oil, the first level of technical support stands at the February 11 low at $51.62 per barrel. With the potential of a trade deal with China rising, the likelihood is that the end of the period of tariffs and retaliatory protectionist measures will ignite the global economy. Economic expansion is bullish for energy demand, so President Trump may have only slowed the ascent of the energy commodity, and more tweets may be necessary and forthcoming in the days and weeks ahead. April crude oil settled at $55.50 per barrel on Tuesday, February 26.