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The Drone Hit – Or How Oil Bulls Decided To Ignore Trump's U-Turn



The headline traders in oil, the presidential tweet coming more than 12 hours after the latest drone hit the perfect opportunity to drop all the caution and buy. President Donald Trump tweeted. Crude prices already up 3% overnight on Tehran's of a U.S. drone, immediately doubled their rally. They ended up almost 6% on the day – their biggest gain of the year.

What seemed to matter less to the market on Thursday was that Trump was already backtracking on his tweet, or rather clarifying it, well before trading in oil closed for the day

Instead of blaming the Iranian state per se, as his initial response seemed to entail, the president told reporters at least an hour before the market wrapped that he thought the shooting down of the surveillance aircraft was The work of a "stupid" individual Iranian general at the Islamic Revolutionary Guard Corps, who had made a "foolish" unintentional mistake. [OfcourseTrumpbeingTrumphedidn'tstopthereThepresidentmuddiedhismessagebyaddingthat"thiscountrywillnotstandforityouwillsoonfindout"whenaskedhowhisadministrationplannedtorespondHeeventhrewinacolorfulobservationoflittlevaluebydescribingthecrisisas"anewwrinkleanewflyintheointment"

'Big' But 'Stupid' Mistake That Oil Bulls Chose To Ignore

But as clarifications on-the-fly, Trump's attempt to set the record straight as good as it could get: Iran made a mistake — big and stupid maybe, but not intentional. [Yetoilbullsdecidedtoignoretheobviousinthepresident'swordssendingcrudepricesintothestratosphereafteraweekwherethemarketwasoftenunkindtothem-includingonWednesdaywhenweeklyUSOildataturnedouttobebullishandtheFedtalkedaboutthepossibilityofcuttinginterestratesOilbearsmeanwhilenochanceofprevailingbeforetheproverbialstature—ortruckwhateveryoucallit—orThursday'smarketmomentum

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<p><span class= WTI 60-Min Chart – Powered by TradingView

But by Friday noon in Asia, oil prices were down as The New York Times reported that, after initially approving several military strikes on the Islamic The following is the drone attack, which is almost 9% on the week, since its inception in April 2018. Almost 4% on the week, its most since February.

again next week if the next dataset on US crude stockpiles / gasoline demand proves strong again

The market could also see a sharp upside if Trump and his team hold, as he has promised, positive talks with China's President Xi Jinping and negotiators from Beijing at the G20, to try and resolve the more-than-year-long trade was between the two superpowers that have threatened to kick a global recession.

The never-ending mantra of production cuts by OPEC oil ministers as they head for their July 1-2 meeting in Vienna and more saber-rattling on Iran are among other things that could sprinkle some magic dust on the market.

Yet, there could be one individual who may spoil the party for oil bulls.

And once again, that's Trump himself

Few Things Matter More To Trump Than Cheap Oil

In trying to tweak his initial response to Iran on Thursday, the president took another chance to show what will truly matter to him between now and election year 2020: low oil prices. His affirmative decision not to go to Iran with this notion

Rallying oil markets – particularly high gasoline prices at the pump presidents during election years.

Many who have followed Trump have not missed the care he has taken of late not to add to the geopolitical tensions that could drive up both crude and pump prices. Of much of the tensions with Tehran — it was, after all, his idea of ​​tearing up Iran's 2015 nuclear accord with the world and imposing fresh sanctions on the country — he also walked a tightrope in responding to its latest taunts.

Olivier Jakob of the PetroMatrix oil consultancy in Zug, Switzerland, says Trump has brought maximum pressure on the Fed to lower and create a stimulated, feel-good economy for investors as well as his base of supporters.

Adds Jakob: [19659024] “It is clear that the president is now fully focused on the bid for re-election in 2020. For that, Trump wants a stronger stock market but also in the Middle East. Iran understands this as well and as a result they are increasing military provocations in the hope that the U.S. lowers their demand in negotiations. ”

Will The President Disrupt The Oil Rally Again

Thursday's drone downing comes after accusations that Tehran was also responsible for last week's in the Gulf of Oman and last month's sabotage of more vessels and oil infrastructure belonging to Saudi Arabia and the UAE. There have also been rocket attacks on US-linked facilities in Iraq by suspected Iranian proxies. Iran also pledged this week to start enriching uranium again, raising fears that it was seeking nuclear weapons.

It is not yet known what Trump has in his toolkit to prevent another major oil rally. His attempt last week to get Japanese Prime Minister Shinzo Abe to a broker in between him and Iran failed spectacularly.

But this is a president whose tweets and comments in the past have more or less served to the market lower than to get it to rally. He could try again, and could succeed — to the frustration of oil bulls. [Function] (f, b, e, v, n, t, s)
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