This week, President Trump again took to Twitter and his 59.4 million followers, of which I’m sure members of OPEC are included, to try and talk down crude oil prices. In a March 28th tweet, the President wrote, “Very important that OPEC increase the flow of Oil. World Markets are fragile, price of Oil getting too high. Thank you!” Saudi Energy Minister Khalid al-Falih said on Wednesday that OPEC and its partners were "taking it easy”. "The 25 countries are taking a very slow and measured approach. Just as the second half of last year proved, we are interested in market stability first and foremost," Falih said in Riyadh when asked to comment on Trump's tweet. The fact is the OPEC has never produced or cut production based on a tweet from the President and will never do so, which is why we are back above $60 this morning.
Russia, however, is different
What oil traders need to watch, however, in terms of a possible end to production cuts, is the doubts of Russia, who is the key producing member of what is being called “OPEC+”. At their recent meeting, Russian Energy Minister Alexander Novak convinced OPEC and specifically Saudi Arabia to cancel a scheduled April meeting at which they were to supposed to discuss extending the cuts past the agreed upon Jun 30th end date. Saudi Arabia had already gone on record with their opinion that the cuts needed to be extended through 2019, but according to reports, Novak told Falih that he will extend in June but can only do it until the end of September as he is under too much pressure internally to end the cuts. If Russia does not participate in cuts, the oversupply of crude will grow very quickly given the weakening global economy’s effect on demand and the increasing U.S. production. This could mean the current bull run to $60 could end quickly.