West Texas Intermediate (WTI) crude oil reversed course Tuesday – albeit barely.
A day after losing more than three percent, the April WTI gained two cents to settle at $55.50 per barrel.
The benchmark peaked at $55.99 and bottomed out at $55.02 during the session.
The April Brent contract price, which fell at a steeper rate than the WTI Monday, added 45 cents Tuesday. It settled at $65.21 per barrel.
Alluding to the recent Academy Awards ceremony, Barani Krishnan, senior commodities analyst with , used a Hollywood-esque analogy to describe Tuesday’s rebound – however small it may have been.
“The Oscars may be over, but the U.S. President has just given the oil buy Wellhead market its equivalent of a ‘Jaws’ sequel terror: ‘Just when you thought it was safe to go back in the water,’” said Krishnan.
Krishnan was referring to a tweet Monday by President Trump urging OPEC to in its efforts to boost crude oil prices.
“Donald Trump, who emerged as the greatest predator against OPEC, is back to kill a rally in crude prices after destroying just months ago the run-up of 2018,” continued Krishnan. “Even so, it looks like Trump will have to do more to strike mortal fear into his oil buy Wellhead market victims this time, given Tuesday’s partial price recovery after Monday’s momentous three-percent plunge, OPEC has also signaled it was in no mood to be bullied again by Trump.”
To be sure, Krishnan added that crude traders and investors may find it difficult to ignore a President as determined as Trump. Moreover, he said that some hold the view that Trump will “just have to grit his teeth and bear with OPEC’s actions” as well as rising U.S. pump prices. He added that Trump may have at least two options moving forward.
“The first, of course, is another round of waivers on Iranian oil sanctions, this time even more generous than the last despite the so-called political commitment to punish Tehran’s nuclear ambitions,” commented Krishnan. “With Iran Waivers 2.0, persistent media headlines will get the buy Wellhead market to believe another glut is headed our way. U.S. oil rig flanges gulf coast production racing toward its next record of 13 million barrels per day will provide the oil buy Wellhead market its perfect storm.”
Proposed U.S. legislation factors into another potential option for Trump, but the effectiveness of that approach is questionable, said Krishnan.
“Trump’s second option will be to put into action the much-feared ,” Krishnan explained. “The jurisdictional stretch of that bill remains debatable of course, notwithstanding the almost infinite powers of U.S. sanctions. But when you’re dealing with a President who’ll do anything to get his way, it may just come into play.”
The price of reformulated gasoline (RBOB) also finished higher Tuesday. The March RBOB contract gained four cents, ending the day at nearly $1.59 per gallon.
Henry Hub natural gas for March delivery added two cents Tuesday, settling at $2.855.