Crude Oil Makes Another New High This Week
This idea was discussed in more depth with members of my private investing community, Hecht Commodity Report.
Crude oil continues to be the strongest commodity out there these days. As precious metals recently fell to their lowest level of the year, copper fell below a critical support level, grains are feeling the pain of tariffs, and many other raw material prices are under pressure, crude oil keeps on grinding higher. After the correction that took the price to a low of $63.59 per barrel on the NYMEX active month futures contract early in the week of June 18, the path of least resistance for the energy commodity has been higher.
On Tuesday, July 3, the price of nearby August NYMEX crude oil futures rose to a higher high at $75.27 per barrel. Meanwhile, the Brent active month September futures contract has not been able to make it back above $80 per barrel since reaching a high of $80.50 on May 22. On that day, NYMEX WTI crude oil only traded to a high of $72.90 per barrel, so then Brent premium since the end of May has declined which is likely the result of OPEC’s increase in output at the June 22 biannual meeting. Despite the production increase by the world’s oil cartel at the end of June, the U.S. President continues to push the OPEC’s leading producer to pump up the volume, even more, these days.
A push for more Saudi output
Before, during, and after the OPEC meeting on June 22, U.S. President Donald Trump continued to push for higher production from the cartel. In his latest tweet on July 4 the President wrote:
The repeated messages from the U.S. President and leader of the free world are a direct message to Saudi Arabia and their allies in the Gulf States.
In the aftermath of the OPEC meeting where the cartel increased output, President Trump has repeatedly called for more oil from the cartel with his latest request for two million more barrels per day. Russia and Saudi Arabia favored a production increase at the June meeting of oil ministers. However, Iran stood against any increase and the Trump administration warned other nations around the world from buying Iranian crude in coming months. The politics surrounding crude oil production in the Middle East is a complicated political puzzle these days. Despite continued requests and even threats about protection in the region, President Trump’s requests for more production have done little to stop the ascent of the price of the energy commodity which remains not far below its most recent high, and around $10 above the lows seen on June 18 before the OPEC meeting.
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