On the subject of oil prices, President Trump seems firmly stuck with a 2005 mindset, when the U.S. was the largest oil importer in the world. But times have changed.
Outlook: Higher Prices
Oil prices are probably headed higher in 2019.
OPEC surprised a lot of people last week by agreeing with Russia to cut a total of 1.2 million BPD of oil from the market. The last time OPEC announced a major cooperation agreement with Russia, oil prices rallied once it became apparent that the group was sticking to its agreement.
I expect similar results this time. Jointly, OPEC and Russia produce more than 50% of the world’s oil. They have significant pricing power if they manage to maintain discipline. I expect they will do so given the positive results from the previous production cuts, and therefore I expect the price of oil to recover back above $60/bbl early in 2019.
But the oil markets still have the Trump wildcard to contend with. As long as he is committed to lower oil prices, he will continue to cajole and coerce Saudi Arabia for more oil production.
Perhaps it’s time for him to rethink whether that’s such a good idea.
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Author: Robert Rapier
Robert Rapier is a seasoned chemical engineer with three decades of international experience in the energy sector. He holds undergraduate degrees in chemistry and mathematics, and a master’s in chemical engineering. Robert has worked extensively in oil refining, production, synthetic fuels, biomass energy, and alcohol production, earning several patents along the way. As Editor-in-Chief of Shale Magazine and a prolific author for Investing Daily, he shares his expertise through various newsletters and his latest book, American Energy: A History of Power, Progress, and Change. Robert's insights have been featured on 60 Minutes, The History Channel, CNBC, and PBS, among others. His articles have appeared in top publications like the Wall Street Journal, Washington Post, and The Economist. For nearly a decade, he has covered the energy sector for Forbes.
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