Oil prices eased, pulling back after US President Donald Trump urged OPEC to increase production at its meeting in Algeria, and slowing bullish momentum that had previously propelled the market toward four-year highs.
Brent crude oil settled down 78 cents at $US78.70 a barrel on Thursday.
US light crude was down 32 cents to settle at $US70.80 a barrel after rising nearly two per cent on Wednesday.
Global benchmark Brent has been trading just below $US80 a barrel, near its highest level in almost four years, on expectations that US sanctions against Iran, OPEC’s third biggest producer, will reduce global supply.
‘We’re stuck in a range here,’ said Tariq Zahir, managing member at Tyche Capital Advisors in New York, with prices supported by the US sanctions on Iranian supplies and pressured by the potential that Chinese demand could wane.
Trump has imposed sanctions in response to Iran’s nuclear program that are to go into full effect on November 4.
Many buyers have already cut Iranian purchases ahead of the new regulations.
It is unclear whether producers such as Saudi Arabia, Iraq and Russia can compensate for lost supply.
The Organisation of the Petroleum Exporting Countries and other producers, including Russia, meet on Sunday in Algeria to discuss how to allocate supply increases to offset the loss of Iranian barrels.
The meeting is unlikely to agree to an official rise in crude output, although pressure is mounting to prevent a spike in prices.
Trump weighed into the debate via Twitter, saying, ‘The OPEC monopoly must get prices down now!’
‘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,’ Trump tweeted.
In the range-bound market, Trump’s tweets may drive prices down slightly, said Tyche’s Zahir, predicting that such tweets from the president would probably continue with the US midterm elections fast approaching.
‘The last thing that he is going to want to have happen is diesel prices and oil prices hitting highs when people are going to the voting booth,’ Zahir said.
The mid-term elections on November 6 will determine if Republicans maintain control of both the US Senate and House of Representatives.
Still, many traders and analysts expect Brent to move above $US80 soon.
‘Brent is definitely fighting the $US80 line, wanting to break above,’ said SEB Markets chief commodities analyst Bjarne Schieldrop. ‘But this is likely going to break very soon.’