Aggiesincebirth said:
Is he wrong? Has anything fundamentally changed in supply and demand for oil to go from mid 50's to 70? I really don't know but I would imagine he has information about chartered ships that we do not have.
I'm not defending his tweet because it does no good, but I am wondering the same thing. OPEC is pumping up this oil price to get that Aramco IPO out there. Will the continue to keep the cuts to keep the price high? They very may will or it could be to get the IPO out. Didn't OPEC just partner with Russia for the Aramco IPO? I am sure there is a lot of data out there and politics behind the scenes that we are not seeing that is leading to his frustration.
He is absolutely wrong. I'm not sure what to tell you other than we're seeing significant draws in oil and refined products BEFORE summer driving season. Throw in the further deterioration of Venezuela's production and the potential collapse of the Iran nuclear deal - there needs to be a risk premium on oil supply.
Ships aren't the way to hide oil and manipulate the oil market. The way to do that is by restricting production (it's way cheaper than chartering ships since you aren't selling the oil right now anyways - especially if you look into the structure of the futures curve and the risks of storing crude in backwardation). Finally, anybody with a Bloomberg terminal has access to where all the supertankers in the world are. Turns out, you can't just hide supertankers with market moving quantities of oil from everybody but the president. Furthermore, even if you could, it could only briefly impact the price of oil at all, because the price is dictated by flows of oil; taking a volume of crude off the market doesn't effect the market really (which is all you could do with supertankers)... Taking daily production off the market does, because the cumulative ffect is SIGNIFICANTLY larger than chartering ships. Oil inventories are far away from record highs. Seriously, did he get his last information on oil inventories in 2016?
This tweet shows the president fundamentally does not understand the oil market? Is that really that shocking given his juvenile view on world trade? (for instance, trade is not a zero-sum game and trade deficits aren't really a bad thing - it basically forces these foreign entities to invest in America and buy government bonds)