Oil prices fell 3 per cent on Friday after U.S. President Donald Trump again pressured the Organization of the Petroleum Exporting Countries to raise crude production to ease gasoline prices.
Profit-taking from the oil market’s strongest bull run in at least a year also pushed prices through technical stops which accelerated the decline, analysts said.
Brent crude futures settled at $72.15 a barrel, down $2.20, or 3 per cent. West Texas Intermediate crude ended at $63.30 a barrel, down $1.91, or 2.9 per cent.
Brent was flat on the week after rallying for four weeks in a row. WTI saw a 1.2 per cent weekly loss, breaking its six-week bull run.
Crude futures were up over 30 per cent this year after OPEC and several allies cut supply by 1.2 million barrels per day, and as sanctions on Venezuela and Iran have reduced output.
On Thursday, Brent rose above $75 a barrel for the first time this year after Germany, Poland and Slovakia suspended imports of Russian crude via a major pipeline due to contamination. Russia, which said it believed the oil could have been deliberately contaminated, plans to restore oil supplies via its key Druzhba pipeline to Europe in two weeks.
Trump told reporters on Friday that he had called OPEC and told the cartel to lower crude prices, without identifying who he spoke to.
“As soon as that comment came out, that was enough ammo to get guys to lift long positions,” said Josh Graves, senior commodities strategist at RJO Futures in Chicago. “They were taking chips off the table at the first hint of bearish news” after several weeks of gains.
Since taking office, Trump has weighed in on OPEC on numerous occasions on Twitter, often exhorting the cartel to lower prices. His comments tend to have a temporary effect on the market, and some traders noted that the recent move higher made the market ripe for profit-taking.
The market, however, pared some losses after U.S. oil drillers this week cut the most rigs since the week to Jan. 18, down 20 rigs to a total of 805, as independent producers follow through on plans to cut spending on new drilling and completions.
Traders also said the selloff was in part due to rumours that Washington could grant China an exemption allowing it to keep buying Iran’s oil, which would increase available worldwide supply.
Two Trump administration officials refuted the rumours, saying neither a wind-down period nor a short-term waiver on China’s oil purchases from Iran are being contemplated to their knowledge.
The United States and China are continuing to negotiate a trade deal to end a months-long dispute.