Oil prices have weakened as investors see Donald Trump’s promise to lower prices as stronger than an OPEC production cut.
USOIL – Daily Chart
The price of US OIL has tried to find a bottom on two occasions since late October but both have failed. There is now a risk of retesting the support around $66.50-67.
Donald Trump has laid out a plan to increase drilling in the United States and halve the price of oil. Those remarks will strike fear into the leaders of OPEC countries that have tried to support prices over recent years with production cuts.
Sources said that Trump plans to roll out new measures within days of his taking office that would approve export permits for new liquefied natural gas (LNG) projects and increase oil drilling off the US coast and on federal lands.
The outgoing Biden administration had been looking to reduce the country’s reliance on fossil fuels and move toward green energy. An early priority is expected to be the lifting of President Joe Biden’s election-year pause on new permits for LNG. Another key move would be to approve the Keystone Pipeline from Canada, an issue that was an environmental flashpoint and was halted on Biden’s first day in office, risking jobs,
“The American people can bank on President Trump using his executive power on day one to deliver on the promises he made to them on the campaign trail,” said campaign spokesperson Karoline Leavitt.
Trump is also expected to pressure the Paris-based International Energy Agency watchdog to support pro-oil policies. The President could withhold funding to the group if they only focus on emissions reduction.
“I have pushed Trump in person and his team generally on pressuring the IEA to return to its core mission of energy security and to pivot away from greenwashing,” said Dan Eberhart, CEO of oilfield firm Canary.
In the near term for oil, investment bank Goldman Sachs sees the potential for an OPEC production cut to lift crude from its current lows. If the price continues to test the recent lows there is potential to start 2025 at a weak point and that could Saudi Arabia and its allies to take action.
The coming year could see further volatility in oil with global flashpoints and a Trump v OPEC price war.
