Oil prices slump more than 2% after Trump urges Opec not to cut supply

LONDON: Oil prices fell more than 2% yesterday after US President Donald Trump put pressure on the Organisation of the Petroleum Exporting Countries (Opec) not to cut supply to prop up the market.

Brent dropped US$1.97 a barrel, or 2.8%, to a low of US$68.15 and was trading at around US$68.40 (RM286.60) by 1045 GMT. US light crude was US$1.55 lower at US$58.38 (RM244.61).

Both crude benchmarks have fallen more than 20% since peaking at four-year highs in early October.

“The market now increasingly looks concerned about the prospect of too much supply,” said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer. “Hedge funds and other speculative (investors) have swiftly changed from the long to the short side.”

Top crude exporter Saudi Arabia has watched with alarm how supply has started to outpace consumption, fearing a repeat of a glut that brought a price crash in 2014.

Saudi Energy Minister Khalid al-Falih said on Monday Opec agreed there was a need to cut oil supply next year by around 1 million barrels per day (bpd) from October levels to prevent oversupply.

But Trump has made it clear he wants oil prices to fall. “Hopefully, Saudi Arabia and Opec will not be cutting oil production. Oil prices should be much lower based on supply!” the president said in a Twitter post on Monday.

That led to a sharp price drop on Monday and the sell-off continued into yesterday.

“This tweet certainly did not help prices,” ING commodities strategist Warren Patterson said.

The US dollar also put pressure on oil, hovering near 16-month highs and so making oil more expensive for importers using other currencies. – Reuters