Crude oil prices moved in opposite directions Thursday morning as Brent was trending down and WTI trending up, both for different reasons.
President Donald Trump blasted OPEC in a tweet Thursday morning, saying the Middle East wouldn’t be safe without U.S. military protection and yet, countries there continue to keep prices high.
“We will remember. The OPEC monopoly must get prices down now!” Trump tweeted.
We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!
Brent declined Thursday morning, trading at $78.59, down 33 cents or 0.42 percent.
Despite Thursday’s losses, Brent prices have flirted with $80 a barrel this month, the highest price since May. Other than those two brief instances, it’s been more than three and a half years since prices were that high.
WTI prices were up Thursday morning on the news that U.S. crude oil inventories were down 2.1 million barrels last week, the fifth straight week of declines.
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Trump’s comments come ahead of the Organization of the Petroleum Exporting Countries meeting with Russia and other big producers for the World Oil Outlook meeting in Algiers this weekend where they will discuss boosting output to push prices down and compensate for looming sanctions on Iranian oil.
OPEC already increased production in August after several years of holding back.
U.S. sanctions on Iran could make it difficult for countries to buy Iranian oil, opening the door for other countries like Iraq to become oil exporting powerhouses. Iraq set a new record for oil production in August.
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Incumbents who face challengers in the upcoming U.S. mid-term elections have reasons to want oil prices — and in turn, gasoline prices at the pump — to be lower this fall, too.
U.S. Energy Secretary Rick Perry had separate meetings with Saudi Arabian and Russian officials this month. Perry credits the two countries with averting a “spike in oil price.”
Oilfield services will make a comeback
Oil field service companies took the biggest hit when energy prices tanked and drillers slashed spending in 2014. That resulted in large-scale layoffs and cuts to a sector that was booming just the year before.
Now, Morgan Stanley predicts drillers will increase spending by 15 percent over the next two years, which means they’ll need oil field service workers again.
“Importantly, 2020 looks to be the first year the industry will experience material, synchronized [capital expenditures] growth since before the downturn,” analysts with Morgan Stanley wrote.
Another 15 percent surge is expected from 2020 to 2022 to roughly $583 billion, Morgan Stanley predicts.
U.S. production is being held back right now because there’s a lack of pipeline infrastructure to get oil out of the Permian Basin in West Texas and eastern New Mexico. That has temporarily depressed prices in the region, prompting some drillers to lock in prices for several years.
But several new pipelines are under construction that could relieve that bottleneck over the next few years, eliminating the need for discounted prices, which will increase capital spending there.